Foreign Currency Explained

Foreign currency and changing your holiday money can be confusing. There are lots of unfamiliar terms and phrases connected to the foreign exchange process, and it can feel very overwhelming - which is why lots of people leave their foreign currency exchange until the last minute, and don't necessarily get the best deal they could have gotten if they had more time up their sleeves.
At Travel Money NZ we want to help you cut through this confusion and make sure you are getting the best value for your travel money, so that changing money is one less thing you have to worry about in prepping for your holiday.

Foreign currency in a nutshell

Let's start by looking quickly at what the foreign exchange market is and how it works.
There are more than 180 currencies recognised in the foreign currency market, and many of these are traded (bought and sold) on the international market, with large companies, financial institutions and governments buying and selling currencies based on set exchange rates. 
Exchange rates exist because not all currencies are accepted in all countries, so, the exchange rate is simply the cost of one currency in the form of another currency. 
There are 2 main systems in place to determine a currency's exchange rate:
  • a floating system - used by countries like the USA, Australia and England, where market factors (supply & demand, foreign investment, imports etc) determine the exchange rate
  • a pegged system - used by countries like Cuba, Hong Kong and the UAE, where the currency is pegged (or fixed) to another country's currency, usually the US dollar

Why are the rates I see on TV different to what I get at Travel Money NZ?

Do you watch the news in the mornings and see the Kiwi dollar going up or down against the USD, the AUD and the GBP? Do you wonder why the rates shown at Travel Money NZ stores, or on our website (or those shown by any other foreign exchange provider) are different to what you saw on TV that morning?

The difference lies in the rates being wholesale or retail rates.

On the TV you see wholesale rate - the rates available to large financial institutions and companies buying and selling millions of dollars of foreign exchange. The rate you see from us is the retail rate - that is the rate that local banks and foreign exchange companies charge to individuals wanting to buy or sell foreign currency.

When do I change my c​urrency?


Should you change your currency two months before your holiday or the day before you leave? It's really up to you!

We recommend changing your currency at least a few days before your trip, to avoid airport fees and exchange scams.
At Travel Money NZ, we have over 60 currencies available to exchange - both in our stores and online. If you choose to buy online, just nominate your nearest store and pick it up when its ready.

Buy vs Sell? Rates & Commission?


What do you​ mean by buying and selling currency?

If you have Kiwi dollars and you want to exchange those dollars for a foreign currency, then we will sell you that currency at the set exchange rate - so you will need to look at the sell rate.
But, if you have foreign currency and want to get New Zealand dollars in exchange, then we will buy that foreign currency from you - so check out the buy rate.

What about fee​s and commission?

Many foreign exchange providers take the buy or sell rate and add their own fees or commission on top of that rate, in exchange for their services to you. So, you should always find out if they charge extras before you make your transaction, as this will affect the overall price you pay.
At Travel Money NZ, we offer our services fee and commission free - so we do not add any extra costs to your exchange rate. What you see on our rates board, and on our website, is the rate you will get on the day.

It's all about the rates

Why do rates chang​e all the time?

The currency exchange market is just like a big marketplace, where prices are determined by supply and demand. If the goods (currency) are in high demand, the price goes up (the currency is seen as stronger). The less in demand it is, the less it is worth.
When it comes to the FX market, there are lots of things that affect the demand for a currency, including interest rates, political factors, economic performance and trade data.
Any of these factors can make a certain currency more or less popular, and can affect the exchange rate of that currency against the currency you want to trade.

How do I know if the rat​e will go up or down?

Trying to predict what might happen from day-to-day that could affect currency exchange rates is like trying to predict what the winning lotto numbers will be.
There is data, historical trends, theory and science you can use to formulate a guess, but it really isn't more than that - no one has a crystal ball to see what may or may not happen that could or could not affect the exchange rate each day.

So when is ​a good time to convert?

There is no set answer for this. You could look at a historical trend for a currency and see if it has been going up or down, and try to predict what it might do on any given day, but that doesn't guarantee that it will continue along that trend line. Something could happen the next day that makes an upward trend go down. It's just the way the foreign exchange market works.