The NZD's Effect on Key Industries

Image © Adobe Images

The price of the New Zealand Dollar (NZD) influences the country’s economy in more ways than one. As it strengthens or weakens, it affects several players differently. An affordable NZD makes exports easier, while a stronger NZD value benefits consumers. It therefore becomes a balancing act for the Reserve Bank of New Zealand (RBNZ) to ensure that all parties can derive some value as the NZD's value peaks and troughs. But which industries are most affected by these price fluctuations?

Unsurprisingly, agriculture, with an emphasis on dairy production, is the first industry to be discussed, as it forms the backbone of the Kiwiland economy. Dairy alone accounted for NZ$27 billion in exports in 2024/25, with over 10,000 herds and approximately 5 million cows. The entire agricultural sector covers over ten million hectares of land, employs many thousands of workers, and feeds over forty million people globally. This crucial sector will benefit from a relatively weak NZD, as it makes its products relatively cheap compared with those of other exporters in the industry, such as the European Union (EU) and Australia.

A strong NZD value, on the other hand, benefits consumers and import-reliant businesses. When the NZD currency is strong relative to other global currencies like USD or EUR, it becomes easier to import many consumer goods and enjoy international services at relatively lower prices. For example, online gambling services are outlawed in the region, leaving patrons very little choice but to explore the Kiwi casinos market licensed offshore, where they can enjoy their favourite games with exciting bonuses, cashback offers, and direct NZ$ deposits. While many of these sites allow New Zealanders to place wagers in NZD, some offer common options such as USD or cryptocurrency, meaning patrons will need to exchange their NZD. If the local currency’s price is strong, the exchange rate will be lower, requiring less to be exchanged than when the currency is weak. It is the same if you are importing electronics or vehicles; a strong NZD allows buyers to stretch their dollar further. 

Another major economic driver in the region is tourism. The stunning landscapes have cemented its position as one of the most beautiful tourist locations in the world. With stunning views of Queenstown, regarded by many as the adventure capital, Auckland, the largest city, and the Bay of Islands, popular for its beaches, there are myriad reasons to visit New Zealand. However, if the currency is too strong and converting from foreign currencies means tourists will have less money to explore the sights, they are likely to look to other locations. A moderately weak NZD makes it cheaper for foreign tourists, ultimately increasing visitor numbers, spending, and tourism revenue.

Construction is a major pillar of economic growth. As more people settle in the region, they will need accommodation, and as corporations expand, they will need larger warehouses and offices around the country. These, combined with the commissioning of new roads, bridges, and other relevant infrastructure, are made possible by imports of materials such as steel and other metals, glass, plastics, and heavy machinery. Having a relatively strong currency makes it easier to import these raw materials at lower costs than if the currency were too weak. If the currency were too weak, construction costs would increase sharply, potentially stalling development.

The NZD's fluctuations create constant winners and losers across New Zealand's economy. While exporters and tourism operators benefit from a weaker currency, consumers and construction firms prefer strength. The RBNZ must carefully navigate these competing interests, recognising that no single exchange rate satisfies all sectors simultaneously in this perpetual economic balancing act.