The current market bias for the NZD to XPF exchange rate is range-bound. Key drivers influencing this stability include the interest rate differential, as expectations for rate cuts by the Reserve Bank of New Zealand could weaken the NZD. Additionally, the consistent peg of the CFP franc to the euro contributes to its stability, reducing volatility against major currencies. Lastly, low inflation rates in the French Pacific territories support the overall strength of the XPF.
The near-term trading range is expected to hold around current levels, reflecting a stable 2.5% bandwidth seen recently. An upside risk could emerge if global economic conditions improve, leading to a stronger recovery for the NZD, as some forecasters suggest. Conversely, a downside risk exists if the RBNZ implements more aggressive rate cuts than anticipated, further weakening the NZD’s position against the XPF.