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Foreign Exchange Forecast Jan 2024

Foreign Exchange Forecast Jan 2024

2024 NZD Forecast from the four major NZ Banks

The four major New Zealand banks have released their forecasts for the anticipated direction of the Australian Dollar (AUD) and the US Dollar (USD) against the New Zealand Dollar (NZD) in 2024.

Despite the strong cultural and economic connections between the two nations, the exchange rate might experience fluctuations. The New Zealand Dollar to Australian Dollar (NZD/AUD) is anticipated to decrease as the global economy recovers, impacted by the ongoing effects of Covid and shifts in central bank interest rates. Notably, interest rates have played a significant role, with the Reserve Bank of New Zealand (RBNZ) initiating its rate hiking cycle earlier and increasing rates at a faster pace compared to the Reserve Bank of Australia (RBA).

Exporters: A lower NZD/AUD exchange rate means that New Zealand goods and services become more competitively priced in Australia. This can boost exports, as Australian buyers will find New Zealand products relatively more affordable. Exporters usually benefit from a weaker domestic currency.

Importers: On the other hand, for importers in New Zealand, a lower exchange rate could lead to higher costs for importing goods and services from Australia. Importers may need to spend more NZD to purchase the same amount of Australian products, which can potentially squeeze profit margins.

The recent shift in the Federal Reserve's stance has greatly impacted the value of the USD and is expected to limit its potential in the coming months. While this may result in a gradual rise for the NZD/USD pair, the anticipation of significant cuts by the RBNZ in 2024 presents challenges for the NZD in relation to other major currencies.

Exporters: With the NZD/USD exchange rate increases, it means the New Zealand Dollar is strengthening against the U.S. Dollar. A stronger currency can make New Zealand goods and services more expensive for U.S. consumers, potentially leading to a decline in exports. Exporters may face increased competition and reduced demand in the U.S. market.

Importers: On the other hand, for importers in New Zealand, an increasing exchange rate means that it takes fewer New Zealand Dollars to purchase the same amount of U.S. goods and services. This can lead to cost savings for importers, making imported products more affordable.

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