Insights 
VT 
In May 2025, New Zealand recorded exports totalling $NZ 7.68 billion, slightly decreasing from $NZ 7.84 billion in the previous month. Imports saw a minimal increase, reaching $NZ 6.44 billion, compared to $NZ 6.42 billion in April.
The trade balance for the month stood at $NZ 1.24 billion. This figure was lower than the previous month’s $NZ 1.426 billion but exceeded the anticipated $NZ 1.06 billion. The annual trade balance is $NZ -3.79 billion.
Currency Stability
Despite the changes in trade figures, the New Zealand dollar showed little change. Its movement remained aligned with ongoing geopolitical developments.
What we’re seeing in these numbers is a slightly reduced trade surplus compared to April, though still beating the market’s forecast. Exports dipped modestly, while imports edged up—nudging the monthly balance lower, yet keeping it in surplus territory. This suggests external demand for New Zealand’s goods remains broadly intact, even as internal consumption resurfaces via incremental import growth.
The annual deficit, however, remains wide, sitting firmly in negative territory. It reflects persistent structural imbalances rather than short-term noise. We read this as a longer-term pressure point that could add weight to yield expectations or policy paths later in the year, depending on how inflation trends and commodity prices unfold.
Interestingly, despite the narrowing surplus, the local currency showed no major reaction. That stability corresponds with broader global currents—particularly cross-border tensions and shifting expectations for major central bank decisions overseas, which are holding more sway than domestic trade updates.
Market Implications
From our perspective, the short-term implications lie less in the headline figures and more in how markets interpret these alongside future price data. The muted response in the currency suggests that derivative markets—particularly those exposed to interest rate or foreign exchange volatility—should remain watchful but measured.
Bond and rate traders should resist moving too early. The current numbers don’t present new directional conviction on their own, but the positive surprise in the trade balance does imply that any near-term weakness in the Kiwi dollar is unlikely to be driven by trade flows.
Volatility expectations remain compressed, yet there’s potential for that to change quickly. If incoming CPI or retail sales figures start to shift the RBNZ expectations, then rate futures and swaps markets may need to reassess positioning fairly quickly. We’re staying nimble, particularly around sheds in pricing for rate cuts later in the year.
Looking ahead, we place more weight on monthly momentum than annual comparisons, especially when evaluating triggers in shorter-term derivatives. With geopolitical noise still present and no drastic currency moves materialising yet, there is little urgency to deviate significantly from existing strategies. That said, we keep a watchful eye on shifts in commodity-led export sectors, as they’ve shown in the past to drive quick re-pricings when trends break.
