The NZD/SGD currency pair extended gains on Friday, pulling back from earlier lows.
Risk sentiment received a notable boost after US President Donald Trump said on Thursday that a deal had been reached with Iran and a final document could be signed soon, potentially as early as the weekend.
Iran, however, responded that no final decision on an agreement had been made, dampening some of the earlier optimism.
The New Zealand Dollar has also drawn support from the Reserve Bank of New Zealand’s abrupt shift to a more hawkish stance.
Reserve Bank of New Zealand Governor Anna Breman had noted that the official cash rate was likely to rise sooner and by a larger amount than previously signaled. She pointed to inflation pressures linked to the Middle East conflict, softer growth and rising input costs in New Zealand.
The central bank’s projections indicate a 25 basis point rate increase at the upcoming July 8th meeting. The RBNZ also suggested that the official cash rate could rise to around 2.85% by year-end, implying as many as three rate hikes over the period.
The NZD/SGD currency pair was last up 0.25% on the day to trade at 0.7471.
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