In early 2022, the New Zealand dollar rose to its highest level in over three years against the US dollar.

Yet months later, it plunged 20% to its lowest value since 2020, leaving small businesses to wonder what it means for them.

And its decline isn’t likely to finish any time soon, with global uncertainty around the Ukraine-Russian War and pandemic recovery prompting the US Federal Reserve to push up interest rates to rein in inflation.

Now New Zealand businesses, like much of the world, are feeling the impact of its exchange rate. But it’s not all bad news.

So, what could this mean for small businesses and what might small businesses do about it?

What does the declining Kiwi dollar mean for importers and exporters? 

If you’re an exporter, the plummeting Kiwi dollar could be good news.  Exported goods will be cheaper for overseas buyers and exporters will experience increased demands for their goods and services.

However, the weak currency isn’t so positive for importers and local businesses reliant on imported goods.

The cost of bringing goods – importantly, construction material – into the country is rising.

Much of that cost is likely to be pushed onto Kiwi customers. Consumers are already feeling the inflation pinch and will look at further ways to cut their spending.

Many small businesses may have difficulty operating during these uncertain times if they cannot absorb some of the costs.

Consumers are already feeling the inflation pinch and will look at further ways to cut their spending

Is the declining Kiwi dollar bad for tourism? 

For the tourist industry, the currency conundrum is something of a double-edged sword.

Overseas tourists could see the monetary value in coming to New Zealand, but you may have second thoughts about that overseas trip.

Also, with more people buying online – both from local businesses and the massive overseas online services such as Amazon – the moving exchange rates are an issue.

Buying locally online is not a problem, but if you want to purchase something from overseas, the weak dollar means it could cost you more.

What might you be able to do about it? 

If you can’t absorb the higher costs, it may be time to think about how to persuade your customers to purchase goods at increased costs.

Communication is key. It’s better to explain the effect of the weaker dollar rather than simply announcing that you are increasing your costs.

It may be a good idea to give the customer lead time before you actually increase those costs, too. Reinforce the value, service and results you are providing to your customers. Perhaps it may be beneficial to explain how you’ve taken steps to avoid even greater price hikes by cutting costs in other areas to minimise the impact.


We live in an inflationary world so it may not be a huge surprise to your customers that costs have gone up. Be honest about those increases.

How you might be able to keep an engaged customer base

It also doesn’t hurt to demonstrate how you are still cheaper – or better value – than your rivals.

Increase your marketing efforts, but also focus on a good relationship with your customers.

Customer loyalty remains the foundation for a good business, so get on the phone or visit your customers to reinforce your commitment to them.

Don’t limit that to your big spending customers either. Ramping up your efforts with smaller customers could mean they might increase their spending, and every bit counts.

You may look to bundling some of your offerings together.

It may take out some of the sting of the price increases and the customer can sees the added benefits of buying more than one item, reducing the overall cost.

What could the future hold for small businesses?

It’s not all doom and gloom. The tougher environment could be an opportunity to review your business model and tailor it to the times.

Think outside the box. Can you introduce new products or services? Can you reduce costs in other areas? Or ramp up efforts to find new customers?

While the impact of the weaker dollar, inflation, labour shortages and the ripple effects of the pandemic may be weighing heavily on our small businesses, they’re proving once again how resilient they are.

In fact, nearly half of 700 small business owners surveyed recently by Canstar say they are optimistic about the future of their businesses.

Do you have the right insurance?

While it can be tempting to underinsure your business assets to reduce costs while the dollar is weaker, this could be risky long-term.

For peace of mind, discuss whether you have the right cover and protection in place with your Steadfast broker.

Your Steadfast broker can help make sure you have the right protection for your business needs, so you can focus on connecting with your customers and generating revenue.

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