New Zealand Dollar Steady
On Thursday, the New Zealand dollar maintained stability around $0.56, building on a nearly 2% increase from the previous session as traders evaluated the impact of escalating US-China tensions. Although New Zealand's direct trade with the US is limited, its economy is particularly susceptible to changes in global trade dynamics, especially concerning China, which stands as New Zealand's largest export destination. In China, deflationary pressures have intensified, evidenced by a decline in consumer prices in March and ongoing producer deflation. On the home front, the Reserve Bank of New Zealand recently reduced its official cash rate by 25 basis points to 3.5%, aligning with expectations due to a persistent decline in inflation and unfavorable domestic economic conditions. This decision also accounted for the potential negative effects on New Zealand's economy arising from international trade constraints. Consequently, there is an increased probability among investors that the central bank will implement another 0.25% rate cut in May, with expectations that rates could decrease to 2.75% or even lower by the end of the year.
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