Best Time To Exchange AUD to NZD: Is It a Good Time To Buy?

Timing the foreign exchange market can be hard due to the many of variables affecting market movements. Plus, you need to worry about finding the best exchange rates and avoiding hidden fees when purchasing New Zealand dollars. Thankfully, online solutions like Wise simplify this process by always offering the mid-market exchange rate and providing auto-conversion tools.

In this article, we'll delve into the factors influencing currency exchange rates between AUD and NZD and introduce Wise, which facilitates transparent, cost-effective currency conversions. By the end, you'll gain a better grasp of when to buy New Zealand dollars with Australian dollars and how to secure the most favourable deal possible.

When Is the Best Time to Exchange Australian Dollars to New Zealand Dollars?

On October 2, 2022, the exchange rate was 1 AUD = 1.14 NZD, which was the peak of the last 5 years. This would have been the best time to buy New Zealand dollars with Australian dollars. Conversely, the lowest point was on March 20, 2020, when 1 AUD = 1.01 NZD. This would have been the worst time to buy New Zealand dollars with Australian dollars in recent years.

The key is to buy when the Australian dollar is stronger than New Zealand dollar, meaning 1 AUD will get you more NZD.

Factors That Influence AUD-NZD Exchange Rate Forecasts

Understanding what influences exchange rates between two currencies is crucial, and one of the clearest indicators to watch is interest rates:

Central Bank Interest Rates

Interest rates play a vital role in influencing exchange rates as they are directly linked to a currency's value through inflation. By definition, inflation is the weakening of a currency's purchasing power over time. Central banks use interest rates to manage inflation and control the strength of their currency.

Central banks set interest rates on government debt, which has a rippling effect on consumer spending habits. When interest rates are high, the cost of borrowing money becomes more expensive. This discourages people from taking out loans or lines of credit. This reduced demand for credit leads to lower spending and decreased demand for goods and services. Consequently, businesses have less incentive to raise prices, which ultimately helps to keep inflation in check and support the value of the currency.

Conversely, lower interest rates make borrowing cheaper, encouraging spending and increasing demand for goods and services. This heightened demand can lead to price increases by businesses, fueling inflation and potentially weakening the currency over time.

Trends and Policies to Look For

When assessing the impact of central bank interest rates on exchange rates, look at the broader policy direction the central bank is trying to achieve over time. It is simply not enough to compare Australia's and New Zealand's interest rates today.

It's also important to ask, are they raising rates to cool off an overheated economy and rein in inflation? Or are they lowering rates to stimulate a stagnant economy and spur growth? Understanding the central bank's policy objectives and the direction of interest rate changes over time can provide valuable insights into the potential future strength or weakness of a currency.

Other Critical Factors to Consider

• Economic Performance: A strong economy with low inflation, positive trade balances, and robust growth typically results in a stronger currency. A thriving economy boosts confidence in the currency and attracts investment, driving up its value.
• Political Stability: Political unrest can negatively affect a currency's value, as investors shy away from countries with high political risk due to uncertainty and potential economic disruptions.

Is It a Good Time To Buy New Zealand Dollars With Australian Dollars?

As an Australian looking to exchange for New Zealand dollars, aim to do so when the Australian dollar is strong. However, exchange rates fluctuate due to global market changes, making it hard to predict when the Australian dollar will strengthen against the New Zealand dollar.

You can look at the recent announcements about interest rate changes by the countries' central banks. These are always on the public record. This information can help you decide whether the Australian dollar is sufficiently strong enough for you or if it's worth waiting for it to get stronger.

Monitor the AUD-NZD Exchange Rate

A more straightforward strategy is to keep an eye on the AUD-NZD exchange rate, and track how it is doing in comparison to the historic trend. You can easily find exchange rate data on Google or XE.com, which show the mid-market rate. These platforms allow you to adjust the view by 1, 3, or 6 months, 1 year, 5 years, or even the maximum available timeframe. This way, you get a clear picture of how the AUD has performed against the NZD over time, and how strong it is relative to the recent past.

Set Up Target Rate Alerts

If you’re aiming for a specific rate, consider setting up target rate alerts. Services like Wise offer these alerts in their app. You can specify the rate you’re hoping to achieve, and Wise will notify you if and when the rate hits your target. This way, you can convert your funds or make your payment at the optimal time.

At Monito, you can sign up for email alerts too. Our rate alerts will notify you when exchange rates significantly change and tell you which provider offers the best deal at that moment. Sign up after using our comparison engine.

Is It Better to Exchange Money in Australia or New Zealand?

As an Australian going to New Zealand, you may find traditional money changer services that offer not terrible rates because this currency pair has many customers, and this competition drives down the prices. However, kiosks at airports and banks are still never best practice.

It's cheaper to simply use a debit card without foreign transaction fees to take out cash at an ATM in New Zealand. The best case is to get a card that waives the ATM fee. Even if you can't avoid the ATM fee, it's worth it because the exchange rate you get from Mastercard and Visa will almost always be better than the ones you get at a high street bank in Australia or New Zealand.

The best option is to use a multi-currency account and debit card that gives you the mid-market rate (like Wise). In this case, the exchange happens digitally on your app, so it doesn't matter if you're in Australia or New Zealand. You'll get the market price no matter what.

What is the Best Rate to Exchange AUD to NZD?

The best rate to exchange AUD to NZD is the mid-market rate, also known as the interbank rate. This rate is the actual exchange rate that large banks use to trade currencies on the global market.

When you decide to buy NZD from traditional financial institutions, such as Australian high-street banks or Western Union, they will charge hidden fees by offering weak exchange rates that are less favorable than the mid-market rate. This hidden fee, often referred to as an exchange rate margin, can add up quickly and significantly increase the cost of your currency conversion.

Open a Free Wise Account For Transparent and Low-Cost Currency Exchanges

Wise is our go-to online money transfer service that offers a user-friendly platform for exchanging currencies at the mid-market rate with transparent, industry-low fixed fees. Here are some of Wise's key features that make it an ideal tool for timing your currency exchanges:

1. Mid-Market Exchange Rates: Wise always uses the real, mid-market exchange rate, ensuring you get the fairest rate possible without any hidden fees or markups.
2. Low, Transparent Fees: Wise charges a small, fixed fee for each transfer, which is clearly displayed upfront, so you know exactly how much you'll pay.
3. Auto-Conversion: Wise offers an auto-conversion tool that automatically exchanges your currencies when the rate hits your target, ensuring you never miss an opportunity.
4. Rate Alerts: You can set up email or app alerts to notify you when the exchange rate reaches your desired level, allowing you to stay in the know about your favorable rates.
5. Multi-Currency Account: With Wise's multi-currency account and card, you can hold and manage multiple currencies in one place, making it easier to move money between currencies as needed. Spend your money like a local with a debit card.
6. Fee Free ATM Withdrawals: Wise lets you withdraw $100 US per month or equivalent without fees. Then a 1.75% fee applies.

Learn more: Read our Wise Account review or visit the Wise website

Compare AUD to NZD Rates With Monito's Comparison Engine

Fees fluctuate all the time. As a result, Wise will not always be the cheapest option to buy New Zealand dollars with Australian dollars. To ensure you're getting the best deal on your currency exchange, run a search on Monito's comparison engine.

Monito monitors the rates and fees of all major money transfer competitors, allowing you to easily find the service offering the best combination of mid-market rates and low fees. By using Monito, you can rest assured that you're getting the most favorable exchange rate with no hidden costs.