The New Zealand dollar strengthened against major currencies on Tuesday as markets increasingly expected the Reserve Bank of New Zealand (RBNZ) to raise interest rates at its next policy meeting. NZD/USD climbed 0.4% to $0.6150 in the latest trading session, supported by persistent inflation, stronger-than-expected economic data and hawkish comments from central bank officials. Annual inflation was 4.7% in the first quarter, above the RBNZ’s 1%-3% target range, while employment data released last month exceeded forecasts, suggesting the economy is operating near full capacity. Traders have assigned a high probability to a rate increase at the meeting scheduled for late May, although the exact date has not been confirmed on the official RBNZ calendar. Markets are pricing in a cumulative 75 basis points of tightening over the next 12 months. The kiwi could extend its gains if the RBNZ signals a series of hikes, while a dovish surprise could trigger a sharp pullback. A stronger currency may attract carry trade flows but could also affect New Zealand exporters’ competitiveness, import costs, corporate earnings and investment decisions. Because the kiwi is considered risk-sensitive, weaker global growth or escalating geopolitical tensions could undermine its gains. Traders and investors are expected to monitor economic data and RBNZ communications for clearer direction.