NZ dollar soars as US dollar plummets
Wednesday, 28 January 2026
The New Zealand dollar is seeing its ninth day of gains and has reached its highest level since July against the USD , trading at US$0.6028 this afternoon.
The climb is in part due to a generally favourable assessment of the potential for upside in the New Zealand economy, which may yet be negated by official cash rate rises from the Reserve Bank later in the year.
But it is more so about a broad-based weakening of the US dollar. The greenback has weakened further today as a result of comments by US President Donald Trump, who expressed nonchalance about the dollar having lost 10% of its value since last year.
The greenback fell about 1.3% on Tuesday in the US, posting its worst day since April 10, 2025, and touching its lowest level since February 2022. It was down more than 1% against the euro, the Japanese yen and other currencies.
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Asked about the soft dollar during a visit to Iowa where he was expected to address affordability, Trump said “I think it’s great”.
“I mean the value of the dollar, look at the business we’re doing. No, [the] dollar is doing great. You know it’s very interesting, if you look at China or Japan, I used to fight like hell with them because they always wanted to devalue their yen … you know that, the yen and yuan, and they’d always want to devalue it. They devalue, devalue, devalue. And I said, ‘not fair.’ They devalue, because it’s hard to compete when they devalue.”
A weaker dollar is, on the one hand, good for companies who operate around the world because they obtain a conversion advantage. But on the other hand, imported goods become more expensive and there can be an impact on inflation from that.
The US dollar’s slide continues since Trump threatened tariffs against several European countries that he said opposed his taking control of Greenland. Such threats, along with worries about risks like the US government’s heavy debt, have periodically pushed global investors to step back from US markets, a move that’s come to be called “Sell America”.
And economic data out today has compounded concerns for those watching the US economy.
Against expectations, US consumer confidence plummeted in January, falling 9.7 points to an index reading of 84.5 — its lowest level since May 2014, according to data released by The Conference Board.
The sharp decline wipes out recent gains and pushes sentiment below the lows seen during the Covid-19 pandemic, the non-partisan think tank that publishes consumer sentiment data said.
Economists had expected the consumer confidence index to inch up to 90 from the 89.1 level originally reported for the previous month.
'Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened,' said Conference Board chief economist Dana M Peterson.
She added, 'All five components of the index deteriorated, driving the overall index to its lowest level since May 2014 (82.2) ‒ surpassing its Covid-19 pandemic depths.'
The report said the present situation index, which is based on consumers' assessment of current business and labour market conditions, plunged to 113.7 in January from 123.6 in December.
Inflation moves?
The Federal Reserve will announce its next move on interest rates on Wednesday UST, but the widespread expectation is that it will hold its main interest rate steady for now.
Inflation remains stubbornly above the Fed’s 2% target, and lower interest rates could worsen increases in prices for US consumers at the same time that they give the economy a boost. Traders expect the Fed to resume its cuts to interest rates later this year.
In the bond market, Treasury yields were relatively steady ahead of the Fed’s decision. The yield on the US 10-year Treasury ticked up to 4.24% from 4.22% late Monday.