New Zealand's dollar has climbed along with the recent bump in Asian currencies, but some analysts see the rally as just another chance to sell.
The New Zealand dollar, also called the kiwi, has climbed this month, fetching around $0.67 in intraday Asian trade Monday, touching its highest levels since July, after trading as low as $0.6251 in September.
"The market might have its rose-tinted glasses on right now, but we wonder how long it can last," National Australia Bank (NAB) said in a note Monday. "We'd be sellers."
NAB expects that while the kiwi may strengthen to fetch as much as $0.67, it's forecasting a fall toward $0.60.
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"After this current squeeze in risk assets loses steam, we feel the balance of risks favor New Zealand dollar downside," it said, citing factors including fading expectations that China's currency will weaken, which had pressured regional counterparts, as well as anticipation that the country's central bank, the Reserve Bank of New Zealand (RBNZ) will cut rates further.
The RBNZ already cut rates in June, July and September, taking the benchmark rate to 2.75 percent. With many developed markets setting their rates at essentially zero, or even in negative territory, that gives New Zealand assets a yield advantage, but with more RBNZ cuts widely expected -- as well as an eventual hike from the Fed -- that just won't last, NAB said.