{"id":388596,"date":"2026-04-20T10:56:08","date_gmt":"2026-04-20T10:56:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/388596\/"},"modified":"2026-04-20T10:56:08","modified_gmt":"2026-04-20T10:56:08","slug":"kiwi-dollar-hits-13-year-low-against-aussie-why-the-currency-is-so-weak","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/388596\/","title":{"rendered":"Kiwi dollar hits 13-year low against Aussie: Why the currency is so weak"},"content":{"rendered":"
\u201cSo that\u2019s why the Reserve Bank of Australia has started tightening,\u201d he said.<\/p>\n
\u201cThey\u2019ve already delivered a couple of hikes and our economists think there\u2019s another three hikes to come this year.\u201d<\/p>\n
Adding to the Aussie dollar\u2019s strength is its energy sector, which stands to benefit from the high oil and gas prices resulting from the war.<\/p>\n
Last month, the Reserve Bank of Australia (RBA) raised its benchmark policy rates for a second straight time, pushing its target rate to 4.1% in response to persistent inflationary pressure.<\/p>\n
By comparison, the Reserve Bank of New Zealand has been cutting rates since the middle of last year, when its Official Cash Rate (OCR) was at 5.5%.<\/p>\n
The OCR now sits at 2.25% but the market is pricing in a hike in July, with a total of three pencilled in for the year.<\/p>\n
Speizer said the RBA was among the first of the main central banks to start tightening.<\/p>\n
\u201cThat means their yields will be higher relative to others, and the yield spread has a direct impact on the cross-rate.\u201d<\/p>\n
New Zealand markets have only recently come around to the prospect of a higher Official Cash Rate.<\/p>\n
\u201cMarkets started jumping on that in the last quarter of last year but even so, the strength of the Aussie economy and its resilience has surprised people positively,\u201d Speizer said.<\/p>\n
\u201cOur economic recovery is fledgling and it\u2019s quite fragile so, it needs a lot of evidence to unfold to prove its worth.<\/p>\n
\u201cAs of now, yes, people think the economy will probably recover, but there\u2019s a question mark on just by how much and how resilient it is.\u201d<\/p>\n
Overlaying the interest rate markets has been the war in Iran, which started at the end of February.<\/p>\n
\u201cYou could argue that Australia will be more insulated from the effects of the war than New Zealand is because Australia has much better energy resources.\u201d<\/p>\n
Since the war started, the New Zealand\/Australian dollar cross-rate has fallen to A82c from A83.5c.<\/p>\n
US dollar<\/p>\n
Against the US dollar, the New Zealand dollar is holding, having bounced off US57c earlier this month to trade at around US59c today.<\/p>\n
For the most part, the US dollar has been stronger as investors seek safe havens while the conflict in the Gulf continues.<\/p>\n
Speizer said the New Zealand dollar\u2019s fall against the Aussie augurs well for the inbound Australian tourism trade, particularly for the upcoming ski season.<\/p>\n
Stats NZ data show visits from Australia came to 1.54 million in the February year, up by 123,000 on the previous year.<\/p>\n
The direction of travel for the New Zealand\/Aussie dollar cross-rate looked to be down.<\/p>\n
\u201cEventually, we will see a turning point when things calm down,\u201d Speizer said.<\/p>\n
\u201cOnce our growth does take hold, then we can accelerate quicker than the Aussie economy,\u201d he said.<\/p>\n
\u201cI don\u2019t see that happening until late this year at the earliest, but it\u2019s more likely to be next year\u2019s story.\u201d<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n