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The New Zealand Dollar struggled to maintain its gains on June 17, 2025, as weakening export demand raised concerns about the country’s trade balance. While the NZD initially strengthened on RBNZ rate hike expectations, it later pared some of its advances after data showed a sharp decline in dairy auction prices—a key driver of New Zealand’s export earnings.
Global Dairy Trade (GDT) prices fell by 4.1% in the latest auction, the steepest drop since January, with whole milk powder prices down 5.3%. Analysts attribute the decline to softer demand from China, where economic recovery has been uneven. China’s post-pandemic rebound has lost momentum, and this is directly impacting New Zealand’s export revenues,” noted an agricultural economist at ASB Bank.
New Zealand’s trade-dependent economy is highly sensitive to commodity price fluctuations, and the NZD often moves in tandem with dairy prices. The country’s trade surplus narrowed to NZD 250 million in May, down from NZD 450 million in April, as import costs rose faster than export earnings.
The NZD’s resilience in the face of weaker exports has been partly attributed to strong tourism inflows. New Zealand’s tourism sector has rebounded strongly, with visitor arrivals reaching 90% of pre-pandemic levels. However, economists caution that tourism alone cannot offset the impact of declining commodity exports, which account for nearly 30% of GDP.
Looking ahead, the NZD’s performance will depend on whether dairy prices stabilize and whether China’s economy shows signs of recovery. Any further deterioration in global demand could force the RBNZ to reconsider its hawkish stance, potentially weakening the NZD. Traders will closely monitor upcoming trade data and Chinese economic indicators for clues on the currency’s next move.
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