Importers are pricing off a dollar forecast the Reserve Bank already got wrong

The New Zealand dollar’s slide is not a story for currency traders. It is a story for anyone who pays a supplier in US dollars, Australian dollars or euros. The trade-weighted index is down more than 4% over the last month and finished last week at levels not seen since March 2011, according to Mark Lister, investment director at Craigs Investment Partners. Against the greenback the kiwi sits just under US$0.57, well short of its long-term average of US$0.66.

For importers already nursing weak demand, every cent of that fall lands on the cost line before a single customer walks through the door.

Weaker against everyone that matters

The breadth of the move is what stands out. Reserve Bank daily data shows NZD/USD fell from 0.59465 on 20 August to 0.55915 on 2 October, while the TWI dropped from 67.17 to 63.81 over the same stretch. Economist Keith Rankin puts the decline at 4.8% across the 17-currency basket between 24 August and 30 September, with the kiwi weaker against every single one of them.

The trans-Tasman picture is harsher still. Bryce Wilkinson, senior fellow at The New Zealand Initiative, notes the dollar touched 81 Australian cents on 29 September, the lowest since early 2013, against a decade average of 90 cents. Retailers, builders and manufacturers sourcing from Australian suppliers are effectively wearing a double-digit price rise without anyone across the Tasman touching a list price.

The rate gap is doing the damage

Lister’s explanation is blunt. New Zealand’s OCR is 2.75% while Australia’s cash rate is 4.60%, a gap of that size seen only once before, in 2010-2012. Global capital chases yield, and right now New Zealand pays less of it than its neighbours.

The Reserve Bank thought it was getting ahead of this. Its September Monetary Policy Statement lifted the OCR 25 basis points and credited rising relative interest rates for a 1.4% TWI appreciation since May. That gain has since been wiped out entirely.

Your budget was built on stale numbers

Here is the part most firms have not clocked. Wilkinson points out the 28 September reading of 64.3 sat well below Reserve Bank and Treasury projections of 66.7 to 67.7. “The concerning third point is that the decline is news to the Reserve Bank and the Treasury,” he writes.

As recently as April, Treasury’s indicators showed NZD/USD around 0.59 and the TWI at 66.50 to 66.89. Any business that locked in annual budgets, supplier contracts or a hedging policy off those settings is now running on assumptions the forecasters themselves have had to abandon.

The dollar is only the first hit

The currency is compounding other shocks, not operating alone. Eco-Pulse links the slide to rising oil prices on Middle East supply fears, higher ocean freight from Asian port congestion and a global memory-chip shortage, and has lifted its Q4 inflation forecast from 3.8% to 4.2%. That assumes petrol reaches about $3.30 a litre by November. Back in May, the Reserve Bank had already warned of elevated prices for fertiliser and petrochemical-derived products.

And the cure may sting too. Markets are pricing a 60% chance of another rate hike by 28 October. Importers could face dearer stock and dearer working capital at the same time.

Exporters are quietly winning

This is not bad news for everyone. Farmers earning in US dollars and tourism operators chasing Australian visitors are getting a genuine competitiveness boost. BusinessNZ says a weak dollar is “generally helpful for inbound tourism”, although it raises the cost of imported goods for hospitality businesses. The lobby group expects modest recovery as rates rise, but cautions the dollar is “likely to be buffeted further over coming months” until geopolitics settles.

Check your exposure before 28 October

The useful question is not where the dollar goes next. Nobody, including the Reserve Bank, called this move. The useful question is how exposed you are today. That means checking how much of the next six months of purchasing is hedged, whether supplier contracts carry currency clauses, how long customer quotes stay valid, and whether margins can absorb another leg down.

Firms that reprice early will lose some sales. Firms that wait for the official forecasts to catch up will lose margin instead, and on current evidence they could be waiting a while.

Sources

• NZ Herald: Why is the NZ dollar falling? The interest rate gap and sluggish economy (2026-10-04)
• Evening Report: Keith Rankin Analysis – Feedback Economics, Stabilisation versus Escalation (2026-10-02)
• The New Zealand Initiative: Why is the New Zealand dollar falling, and what could it mean for prices? (2026-10-01)
• Treasury: Fortnightly Economic Indicators – 23 April 2026 (2026-04-23)
• NZ Herald: Weak NZ dollar, high oil prices pile on pressure as RBNZ’s OCR call nears (2026-10-02)
• BusinessNZ: Planning Forecast September 2026 (2026-09)