The New Zealand Dollar-or Kiwi- has recently underperformed almost every industrialized currency, and has been dubbed “the dog of the currency world.” However, several developments have induced optimistic forecasts from economists and experts, who predict a period of NZD appreciation. First, the revaluation of the Yuan has generated broad levels of support for ‘Pacific’ currencies. Next, real economic growth and inflation in New Zealand continue to climb, which may force the Bank of New Zealand to forestall its planned rate cuts. At 6.75%, New Zealand interest rates are currently the highest among developed nations. As a result, several prominent New Zealand analysts have predicted double-digit appreciation of the NZD by year-end. The Dominion Post reports:

The Bank of New Zealand is picking the US-NZ dollar cross rate to fall from the current 67.5 level to 67 by September, and to 66 by December. Brokers First NZ Capital expect it to drop even faster – to 66 by September, to 64 by December and to 61 by the end of next year.

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