New Zealand Dollar on Cusp of Erasing 2025 Gain on Rate-Cut Bets

New Zealand’s dollar is on the verge of becoming the first major developed-market currency to wipe out its gains against the greenback this year as aggressive central bank interest-rate cuts weigh on sentiment amid a faltering economy.

The kiwi is the worst performing Group-of-10 currency versus the dollar in 2025, and has trimmed its gain versus the greenback to just under 1% from more than 9%. New Zealand’s dollar is set to fall to 55 cents before rebounding to 57 cents by year-end, according to Westpac Banking Corp. The kiwi closed around 56.5 cents on Monday.

New Zealand’s currency has been under pressure as and the economy nears slipping into its in as many years. The Reserve Bank of New Zealand has cut the official cash rate by three percentage points July last year, and traders are pricing in two more reductions by mid-2026, according to swaps data compiled by Bloomberg.

While the New Zealand dollar may find support around 56 cents this week, “risks remain skewed to the downside” with data including retail spending and inflation expectations due shortly, said Imre Speizer , a strategist at Westpac in Auckland. “Data has not yet convincingly turned up yet, so market pricing for the official cash rate is nudging slightly lower, in turn weighing on the NZ dollar.”

Some strategists, however, predict the currency may be due a rebound. Those surveyed by Bloomberg expect the kiwi to climb to 59 cents by year-end. Seasonal trends may also offer support, with the currency gaining an average 2.5% in November and December over the past decade amid stronger meat exports, according to data compiled by Bloomberg.

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Even so, milk prices — New Zealand’s top export — have fallen to their lowest in more than a year amid a global supply glut, further weighing on sentiment. The weak domestic outlook is also likely to offset any seasonal lift, Westpac’s Speizer said.

“New Zealand’s economy and resultant NZ-US yield spreads is the main local driver at present, commodities less important right now,” he said. The kiwi will remain pressured “over next month or so, and then possibly the beginning of a recovery into next year.”