Kiwi Will Outpace Euro on Widening Rate Gap, Strategists Say

New Zealand's dollar is projected to strengthen as much as 3.2% against the euro over the next three months, as strategists at Macquarie, Westpac, and CIBC expect the Reserve Bank of New Zealand to outpace the European Central Bank in raising interest rates. Overnight index swaps show the RBNZ is expected to hike its benchmark rate by over a percentage point in the coming year, compared with about 75 basis points of tightening from the ECB. The EUR/NZD pair fell 2.5% this month and could drift toward 1.90, driven by a widening rate gap and New Zealand's strengthening economic activity indicators.