5th October 2004
I transferred my British currency to New Zealand in 1999. Each £1.00 transferred bought NZ$3.10.
Today the New Zealand Dollar is stronger. If you emigrated from the UK today, £1.00 would buy only around NZ$2.70.
Similarly, if you had arrived from the USA in 1999, each US$1 would have bought close to NZ$2.00. Today, your $US would buy only about NZ$1.50.
Most migrants love their lives here but some do not. It's estimated that around one quarter or more of migrants will eventually return to their country of origin.
It's possible that, sooner or later, you might become one of the minority of migrants who ultimately decides New Zealand is not where you wish to live.
If this turns out to be the case, movements on the currency markets may severely affect your ability to return home.
Imagine you arrived in New Zealand from the United Kingdom in 1996 bringing £100,000 with you. At the prevailing exchange rate this would have bought NZ$230,000. Imagine you were forced to return permanently to the UK in 2000 when each NZ Dollar bought only 28 pence. Your dollars would have bought £64,000. You would have lost £36,000 purely on exchange rate gyrations.
Of course, these gyrations can also work in your favour. Anyone who arrived from the UK with £100,000 in 2000 and returned there today would be £30,000 richer, purely from exchange rate movements.
The graphs below show the currency fluctuations over the last 20 years for the NZ$ against the British Pound and the United States Dollar.
Value of £1 in
New Zealand Dollars since 1985
Value of US$1 in
New Zealand Dollars since 1985
The graph of the US$ is particularly striking. The Greenback is currently close to an all-time low, buying only around NZ$1.50.
If you convert your American dollars today, it's possible you will end up wishing you had delayed the transaction for a year or two.
Economists from New Zealand's major banks believe the New Zealand Dollar will lose strength over the coming year and trade in the range of NZ$1.60 - $1.90 to US$1.
We live in an uncertain world. We can neither be sure of currency movements nor whether New Zealand truly will be our home for life.
Expect the best, but it's wise to prepare a Plan B should things not turn out as expected.
