Kiwi travellers urged to keep eye on currency, in wake of Trump victory

The kiwi fared better against the Australian dollar (Getty)
The kiwi fared better against the Australian dollar (Getty)

The New Zealand dollar has had a rocky ride over the past 24 hours, as the new reality of a Donald Trump-led United States sinks in.

And Kiwi travellers are being warned the volatility could last a while.

The dollar plummeted on Wednesday from 74 to 73 US cents, then fluctuated a bit, hitting a low of 72.7. On Thursday morning it sharply rose, settling in between 73.3 and 73.4, after Reserve Bank Governor Graeme Wheeler announced a cut to the official cash rate - to a record low of 1.75 percent, but still high by international standards.

The kiwi fared better against the Australian dollar, which initially fell more sharply - falling from 77.5 US cents to below 76, and even losing ground against the euro and yen - and also had a softer recovery.

"We've been warning our customers about currency volatility, and the early reaction by global markets resulted in a decrease in the value of the kiwi dollar before results were even confirmed," says Daniel Jackson of Travel Money NZ.

"Sales volumes were markedly higher late in the day and our website traffic indicates a high level of customer concern and interest. We are expecting continued volatility in markets through the day as markets react, and further changes in exchange rates."

The New Zealand dollar is highly traded, accounting for 2 percent of all currency trades - despite our economy making up about 0.28 percent of the global economy. As such, it's prone to volatility when the global economic outlook is hazy.

The uncertainty means travellers might get more or less bang for their buck on a day-to-day basis. Mr Jackson says Kiwis planning to travel should look to lock in exchange rates if they want to have peace of mind.

"We'd like to reassure customers that at the moment supplies of US dollars in our stores are good, but to keep in mind the high levels of demand."

The US dollar is usually seen as a safe currency to buy, thanks to the strength of the US economy - the globe's biggest. Even it fell during the vote counting, losing ground to the yen - another usually safe currency. The US dollar has since rebounded, following Mr Trump's uncharacteristically gracious acceptance speech.

Economist Shamubeel Eaqub warned on Thursday Mr Trump's economic policies were still largely unknown, outside of his opposition to trade deals like the Trans-Pacific Partnership and NAFTA.

He says opposition to Mr Trump on the country's west coast could provide New Zealand with an opportunity to entice liberal Silicon Valley types to our shores.