There are reasons for further NZDJPY gains over the medium term.

New Zealand Dollar

The RBNZ hiked rates by 25bps for a third consecutive meeting this week. However, many members saw the decision as finely balanced between a 25bps and a 50bps rate hike. This was a hawkish bias. Furthermore, the central bank’s tone was more hawkish as it was prepared to move in larger increments if necessary. This hawkish tilt was seen in the projections:

  • Official cash rate at 1.49% in June 2022 (previously 1.51%)
  • Official cash rate at 2.57% in March 2023 (previously 2.30%)
  • Official cash rate at 2.84% in June 2023 (previously 2.40%)
  • Official cash rate at 3.35% in March 2025


The Bank of Japan (BoJ) has made an important move recently by assuring markets they will buy an unlimited amount of JGBs. They have done this in order to keep the bond yield of the 10-year yield within the +0.25 and -0.25 bands. This means that the JPY should remain structurally weak. Furthermore, the inflation in Japan is relatively mild and still well below the BoJ’s 2% target. This is another key reason the JPY should remain weak.

Major Trade Risks:

  • Any breakdown in the Russian/Ukrainian geopolitical risk event could see highs beta’s like the NZD lose value.
  • Any breakdown in the Russian/Ukrainian geopolitical risk event can also see bids come into the JPY.