NZD Exchange Rate

What influences the NZD/AUD exchange rate?

Both the NZD and AUD are considered commodity currencies, but the commodities that influence the value of the NZD and AUD are different. While the Aussie dollar may fluctuate with the price of metals and iron ore, the New Zealand dollar (or Kiwi) can depend heavily on the price of milk due to New Zealand’s reliance on its dairy industry for 30% of all exports.¹

As both the AUD and NZD are most actively traded against the U.S. dollar (USD), the relative strength of the U.S. economy may play a role in the AUD/NZD exchange rate. The balance of trade between Australia and New Zealand may also influence currency fluctuations and any slowing or growth in major export partner, China, may also influence the NZD/AUD exchange rate.

NZD/AUD Snapshot

The Australia – New Zealand Closer Economic Relations Trade Agreement (known as ANZCERTA) is one of the most comprehensive bilateral free trade agreements in existence. It covers substantially all trans-Tasman trade in goods, including agricultural products, and was the first to include free trade in services.

--Australian Government, Department of Foreign Affairs and Trade

• In 1914, Australia and New Zealand lost a combined total of over 12,000 men on the shores of Gallipoli. The ANZACs (Australian and New Zealand Army Corps) still maintain a strong military relationship--often fighting side by side.

• The islands of New Zealand are actually the peaks of the 93% submerged continent Zealandia. It’s about half the size of Australia.

• While it’s well known that Australia was used as a penal colony by the British, New Zealand had a large proportion of missionaries during colonisation.

What’s Next?

For a more general discussion about exchange rate forecasting and macroeconomic factors to consider, check out this article.

Exchange Rate Forecasting: Strategies for Success

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New Zealand Dollar (NZD) Forecast & Predictions | OFX

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