Understanding how exchange rates affect businesses is essential for companies based in these coountries trading internationally. Whether you’re importing goods, selling overseas, or managing foreign payments, fluctuations in the New Zealand dollar (NZD) or Australian dollar (AUD) can have a direct impact on your costs and profits. Many business owners overlook how exchange rates affect businesses, but even small changes in currency values can significantly alter the price of goods, services, and operational expenses.
The impact of a stronger NZD or AUD
A stronger NZD or AUD means more buying power when converting to other currencies. This can be an advantage for some businesses but a challenge for others.
- Importers benefit – If you import stock, materials, or equipment from overseas, a stronger currency makes those purchases cheaper. Businesses sourcing from China, the US, or Europe will see costs drop.
- Exporters struggle – If you sell products or services internationally, a stronger currency makes them more expensive for foreign buyers, which can reduce demand.
- Overseas travel and expansion become cheaper – Businesses with staff travelling abroad for conferences or expansion plans will find flights, hotels, and expenses more affordable.
The impact of a weaker NZD or AUD
When the NZD or AUD weakens, it becomes more expensive to buy foreign currency, which can have the opposite effects:
- Exporters gain a competitive edge – Goods and services become cheaper for overseas buyers, which can boost sales.
- Importers face higher costs – Businesses that rely on imported goods may need to absorb the extra expense or pass it on to customers.
- Fuel and energy prices rise – A weaker currency can drive up the cost of fuel, energy, and imported machinery, increasing operating costs.
Key factors influencing exchange rates in 2025
The NZD and AUD are influenced by a range of economic and political factors. Understanding these can help businesses anticipate shifts:
- Interest rates – If the Reserve Bank of New Zealand (RBNZ) or Reserve Bank of Australia (RBA) raises interest rates, their respective currencies tend to strengthen.
- Global economic conditions – Developments in major economies like the US and China can impact demand for NZD and AUD.
- Commodity prices – Both New Zealand and Australia rely on commodity exports, so fluctuations in prices for dairy, iron ore, and natural resources can affect currency strength.
How to protect your business from currency fluctuations
Businesses trading internationally don’t have to accept exchange rate swings as an unavoidable risk. There are ways to manage and even take advantage of them.
- Lock in rates with forward contracts – If you make regular overseas payments, securing a fixed exchange rate for future transactions can protect against market volatility.
- Use an FX provider instead of banks – Traditional banks typically charge higher margins and fees on currency exchanges. Using a specialist provider such as Tasman FX can offer better rates and lower costs.
- Time your transactions strategically – Keeping an eye on market movements can help you secure more favourable exchange rates. You can track updates from the Reserve Bank of Australia and Reserve Bank of New Zealand to anticipate rate changes.
- Negotiate multi-currency pricing – If you import goods, consider asking suppliers to invoice in different currencies so you can choose the most cost-effective option.
- Get expert advice – If exchange rates impact your bottom line, working with an FX specialist can help you develop a strategy to minimise risk.
Stay in control of exchange rate risks
Constant fluctuations in the NZD or AUD can be challenging, but businesses that stay informed and take proactive steps can reduce uncertainty. Whether the currency is strengthening or weakening, there are always ways to manage costs and improve profitability. Our experienced team at Tasman FX can help you stay informed about how exchange rates affect businesses so you can make the best decisions.
If you’re looking for better exchange rates and lower fees on international payments, contact Tasman FX today to see how we can help.
This article is for informational purposes only and does not constitute financial advice. Businesses should evaluate their specific needs and consult with a professional before making financial decisions.
