New Zealand Dollar Currency Exchange Volatility

You may be wondering why we stress the value of being able to choose when you change your Pounds Sterling to New Zealand Dollars – well, it can make a really big difference to the amount of Dollars you will get for your Pounds. And, whether you are transferring a pension fund, an inheritance, your life savings or your home equity, the more dollars you get the better.

Please note that the exchange rates used in this article are indicative of general trends.For current exchange rates check the Marketwatch area of the HiFX website, or the Currency Converter on the right-hand side of this page.

Exchange Rate Volatility over a long term

This graph shows the Pound to New Zealand Dollar exchange rate over the five years from the beginning of January 2006 to the beginning of January 2011:

(These are the average daily Interbank or wholesale rates – there would have been further variation within each day’s trading, and you would get a slightly different rate as an individual using a currency exchange service).

The average rate over this 5-year period was just under 2.54 New Zealand Dollars to the Pound. If you had changed £100,000 at the best possible rate over this period (in June 2006), you would have received around $305,500. At the lowest rate over this five-year period (at the beginning of January 2011), you would have received around $197,400 – a $108,100 difference!

Exchange Rate Volatility over a medium term

Looking over a shorter time-frame, the difference can still be significant. The following graph illustrates the average daily Interbank exchange rate for the three months from August to October 2009, which was a particularly volatile time:

If you changed your £100,000 on the best possible day over this period, you would have received about $254,000. On the worst day, it would have been about $215,000, a difference of $39,000!

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