Shares of the iShares MSCI New Zealand Capped ETF (NYSEArca: ENZL) are higher by 1.8% in midday trading Thursday, the first U.S. session after the Reserve Bank of New Zealand  became the first developed market central bank to raise interest rates.

RBNZ hiked its official cash rate to 2.75% from 2.50%. The New Zealand dollar is higher by 0.8% against its U.S. counterpart after RBNZ Governor Graeme Wheeler said further rate hikes are likely this year and that the official cash rate could rise by as much as 125 basis points in 2014.

New Zealand’s rate hike was widely expected and forecast by some traders as far back as early 2013. Some forex traders are betting New Zealand’s benchmark interest rate could nearly double over the next two years. That is not necessarily a bad thing as ENZL has already defied comparatively high rates and a strong currency. [A Developed Markets Gem for 2014]

Over the past two years, ENZL, the lone New Zealand ETF is higher by 31.1%, more than five times the gain by the iShares MSCI Australia ETF (NYSEArca: EWA) over the same period. High interest rates have predictably fueled a solid dividend yield on ENZL. The ETF’s trailing 12-month yield of 3.68% is roughly double that of the S&P 500.

It is expected that RBNZ will raise rates again in April and June and then pause until December, Bloomberg reported.