NZD/USD: Fundamental equilibrium is estimated at 0.6600 – BBH
NZD/USD is heavy near 0.5600, BBH FX analysts report.
A higher terms of trade raises the fundamental value of NZD
"New Zealand’s terms of trade index overshot expectations rising 3.1% q/q in Q4 (consensus: 1.4%) vs. 2.5% in Q3 to the highest level since Q2 2022. A higher terms of trade has a positive net wealth effect on the economy and raises the fundamental value of NZD."
"Nonetheless, NZD needs to keep trading at a deep discount to fundamental equilibrium (which we estimate at around 0.6600) to attract foreign investments and recycle the country’s large current account deficit (-6.4% of GDP)."
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FXStreet Insights Team
FXStreet
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.
