WELLINGTON: The worst may be over for the New Zealand (NZ) dollar, as higher dairy prices and a push-back of interest rate cuts by the nation’s central bank should support the currency.

       The kiwi may recover toward 62 US cents by March-end as traders abandon bets of a May rate cut, according to forecasts.

       The currency can reach “the mid-60’s” should the Federal Reserve ease policy before the Reserve Bank of New Zealand or RBNZ, Westpac Banking Corp analysts wrote in a note. The currency closed at 61.13 US cents last Friday.

       Markets are now pricing an almost 80% chance the RBNZ eases rates in May – less than expectations at the start of January, while economists at ASB Bank Ltd and ANZ Bank New Zealand Ltd expect the first cut in August at the earliest.

       That makes this week’s inflation print “very important” for the kiwi’s direction after a pickup in business sentiment suggests the economy is getting a second wind, said David Croy, a rates strategist at ANZ in Wellington.

       “The market has overcooked things to the downside for NZ rates and the NZ dollar, so the kiwi’s probably not far from finding a base,” Croy said. — Bloomberg