VIEW: Kiwibank note that "success in...........>

KIWI: VIEW: Kiwibank note that "success in eliminating the virus and moving out

of lockdown earlier, makes NZ the envy of the world... And the sharp bounce in

spending & activity out of lockdown has us growing in confidence. NZD is

reflecting the relative optimism, and has risen sharply towards US$66c. The

recent low of US$55c seems like a lifetime ago. The strength of the NZD flyer

has been supported by a strong terms of trade. Our export prices have held up

relatively well, and our imported prices have eased. But the rising NZD can

quickly undermine the terms of trade boost. The other major driver of the NZD is

interest rate differentials. We talk of RBNZ action, but other central banks are

forced to do more. Our NZD/USD forecasts have barely changed from early in the

year, but the complexities around the forecasts have changed substantially. The

NZD should remain relatively well bid into year end. But we suspect a drop back

into the low 60s in 2021. Further policy action from the RBNZ will assist the

NZD's decline. At US$66c today, the risk is asymmetrically lower. Our year end

forecast of US$67c offers little in the way of upside. As the world eventually

(hopefully) recovers into 2022, we expect the NZD to outperform once again."