What the Big 4 Banks Forecast for the New Zealand Dollar in 2020

A bank forecast for the New Zealand Dollar (NZD USD) usually differs between banks and changes from month to month. This article looks at the general trend in NZD USD forecasts from the big 4 banks and how it might impact you.

2020 New Zealand dollar NZD Forecast

Bank forecasts for the NZ Dollar

The New Zealand Dollar (NZD USD) hit a 10-year low against the US dollar in March, but has since improved. The NZD reached a one-year high recently, while the US dollar is nearing 2 and a half year lows.

Bank forecasts suggest the NZD currency only improve slightly by the end of the year, but this is uncertain with another outbreak of the coronavirus in Auckland.

How will coronavirus affect exchange rates?

Uncertainty from the coronavirus pandemic increases volatility in currency markets. Generally, safe-haven currencies like the USD, CHF and JPY will likely move higher. However, commodity currencies such as the AUD, NZD, CAD and ZAR exchange rates will likely fall.

Currently, the reverse is true. The USD is falling, which is supporting commodity currencies including the NZD.

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Will the NZD get stronger in 2020?

Unlikely. If we're to believe major bank New Zealand Dollar forecasts, the NZDUSD will remain around current levels of 67 US cents to the NZ Dollar. And perhaps move a touch higher by the end of the year.

2020 New Zealand dollar NZD Bank Forecast


Let's examine the 5 most likely reasons the NZ dollar will weaken more than expected:

  • Coronavirus pandemic impacts New Zealand's economy, plus tourism and imports/exports take a huge hit
  • China’s economic growth slows even more than expected from the coronavirus pandemic, reducing China trade and lowering demand for NZ imports
  • New Zealand's economy continues to slows, the Reserve Bank of New Zealand cut interest rates earlier than expected, devaluing the NZD
  • Economic growth countries outside of New Zealand slow down and inflation only slowly and gradually picks up, increasing the chance of interest rate cuts elsewhere
  • The coronavirus pandemic is controlled, the US economy picks up and the Federal Reserve (central bank) increases interest rates, supporting the USD


How does a weaker NZD affect me?

A weaker New Zealand dollar isn’t great for New Zealanders living in Australia and other places abroad. Those who have moved to overseas locations will see a decline in overall spending power if they're servicing their lifestyles with NZD payments.

If you want to have some certainty for your money transfers even when the New Zealand dollar is weak, you can check out our currency calculator for the best rate.

With the NZD falling, New Zealanders would normally expect an increase in tourists, usually from neighbouring Australia. However, with the coronavirus pandemic preventing travel plans indefinitely, it isn't likely that travel between the two countries will happen until at least 2021.

2020 New Zealand dollar NZD Bank Forecast

What are the key influences on the NZD exchange rate?

1. New Zealand Economy

The New Zealand economy is under pressure from the coronavirus pandemic. Domestic economic weakness can lead to a weaker NZD. Unfortunately, a slower global growth environment will also impact the domestic economy negatively.

2020 New Zealand dollar NZD Bank Forecast


2. New Zealand Politics

The political scene (delay in electing a new prime minister) in New Zealand has generated uncertainty. Greater uncertainty from politics means investors will sell the NZD. Particularly, if government policies are deemed as ineffective for tackling the coronavirus crisis or unable to stimulate economic growth.

3. Other Currencies

The US dollar (USD) has a significant influence on the New Zealand Dollar. Generally, when the USD gets stronger, the NZD is relatively weaker and vice versa.


Wholesale exchange rate updated

NZD bank forecast currency pairs

2020 New Zealand dollar NZD to Euro Bank Forecast

NZD to GBP forecast

The NZD GBP cross rate will largely be at the whim of coronavirus and Brexit developments and will therefore continue to be volatile near-term. Currently the NZD GBP is trading around 0.5076. Longer term outlooks suggest the NZD GBP currency pair could remain around 50 cents by the end of 2020.

Related Article: British Pound GBP Bank Forecast 2020

2020 New Zealand dollar NZD to Australian Dollar AUD Bank Forecast

NZD to AUD forecast

The NZD AUD exchange rate has been choppy since the beginning of the year, currently settling around 0.9234. For 2020, the major banks are expecting the NZD AUD to stay around 92 NZ cents to the Aussie dollar or move slightly lower.

Related Article: Australian Dollar AUD Bank Forecast 2020

2020 New Zealand dollar to Euro EUR Bank Forecast

NZD to EUR forecast

The NZD EUR cross rate has moved 3.5% higher to about 0.5700 from 0.5524 in the beginning of August. Unfortunately, major banks think the NZD EUR cross rate could fall again in 2020, towards 0.5500 by the end of the year.

Related Article: Euro EUR Bank Forecast 2020

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General advice: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions.

By Arlene Mc Donnell Updated October 28th, 2020