The New Zealand dollar dropped to around $0.565 on Wednesday as investors reacted to the latest domestic inflation data.
New Zealand dollar weakens after inflation data
New Zealand's annual inflation rate remained steady at 2% for the fourth quarter of 2024, slightly above expectations but still within the Reserve Bank of New Zealand's target range of 1-3%. On a quarterly basis, the Consumer Price Index (CPI) increased by 0.5%, a slight slowdown from the previous quarter's 0.6% rise. The data indicated that price pressures remained relatively subdued, supporting expectations for a 50-basis point rate cut at the central bank's February meeting.
Trump's tariffs hit NZD
Additionally, U.S. President Donald Trump's announcement of a 10% tariff on Chinese imports starting February 1st further pressured the Kiwi dollar, given China's status as New Zealand’s largest trading partner.
