Investment Adviser: Shifting exchange rates are impacting your portfolio | Ryan Bridge TODAY

Added: 2026-05-13

[00:00:00]It's time to talk personal finance, thanks to our partners Forsyth Barr.

[00:00:03]Currency exchange rates can change on a dime, quietly impacting the performance of your investment portfolio. So, it's important to understand, but also quite complicated. Here to break it down for us in a really simple way for me is Mark Richardson, investment advisor at Forsyth Barr. Mark, good morning.

[00:00:21]It's not simple, actually. You know, it is something that some people get, you know, really carried away with. Other people sort of, you know, just don't want to know when it comes to currency and and exchange rates. But, but it is a quiet force that's working away in the background on on your returns. And it's something that, especially as wealth manager, you've got to be aware of.

[00:00:40]Um, you know, so many people think about what's the market doing, what are interest rates doing. Well, the currency and exchange rate has a definite bearing on the bottom line of your portfolio.

[00:00:49]Especially for New Zealanders, cuz you know, average New Zealander investor will be invested in Australia, they will be invested in the US, and they'll be invested in Europe and the United Kingdom, and, you know, around the world. It's one of those little things.

[00:01:00]I set up my own little trading account couple of months ago, well, actually about 6 months ago now. But, I've made more off of just the currency than I have off of what I'm actually trying to trade. So, it's it's quite a significant factor if you're doing it in America, right?

[00:01:14]>> And it can can go the other way as well.

[00:01:16]I I guess why sort of picked this as a topic because if you have a look at New Zealand dollar to the Australian dollar right now, what's going on in Australia has meant that you know, the New Zealand dollar is is quite low against the Australian dollar. It's it's a Uh, you know, you could say it's about 5 cent to 7 cent below averages. So, so that has a bearing on if you were using New Zealand dollars to buy to buy Australian holdings in the Australian economy, then all of a sudden you think, okay, well, that's expensive for a start. Then if New Zealand dollar maybe goes back, you know, mean revert, starts going back, if we start lifting our interest rates or some something happens.

[00:01:51]Um, you know, you might have made 10% on your investment in the company over there, but, you know, the the the lift in New Zealand exchange rate, the New Zealand dollar, you know, might take 5% off that. So, it's always a factor that you have to think in it. It [clears throat] also is a factor as to where you might want to sit your money in cash when it's not invested. You might want to sit in Australian dollars because you know, part of the reason why the Aussie dollar is so strong against us is they've got pretty high interest rates right now and you can get a decent return on that cash. This takes me back to Mrs. Felton in fifth form economics talking about hot money that you you know, when that when you lift your interest rates, the hot money flows in cuz to your currency cuz they want to get the the advantage of the higher interest rates, right? Well, it's simply supply it's like anything. It's market driven. It's supply and demand. So, let's say there's a lot of demand for you know, businesses or commodities within the Australian we'll use Australia as an example since I've started on it in in that country or they're offering high interest rates right now because the the OCR is quite high.

[00:02:51]Then, if you want to invest in Australia, you have to do it in Australian dollars. So, there is a demand for the Aussie dollar. Therefore, supply and demand forces the currency to goes up to to value. Um, what does this mean for investment outcomes?

[00:03:06]Well, I mean, first of all, it goes back to you know, diversify. I say that every time I'm in here, but diversifying currencies as well. Don't just think about it. You're diversifying in assets and different businesses. I think you know, you want to have a spread across the world because it is a complicated beast and it is hard to read especially you know, currency [snorts] markets can be difficult to predict. Um, but you you've just got you've just got to consider it as part of your investment decisions. Where where is a New Zealand dollar against other currencies? What is New Zealand dollar likely to do? New Zealand if if you own assets let's say in America, New Zealand dollar weakens, then the bottom line will obviously read a lot better for you because all of a sudden what you bought in the US actually and expressed in New Zealand dollars is a lot more valuable now. So, you know, but it can work the other way.

[00:03:51]New Zealand dollar strengthens, it will effectively eat into your bottom line.

[00:03:55]See, this is why I just hand it over to you and then >> [laughter] >> let somebody else take care of it.

[00:04:01]That's That's fine, right? You know?

[00:04:03]Um it's, you know, but it it just comes, once again, every every sort of month I say it is um you know, time and diversification.

[00:04:12]Um there there is no substitute to that.

[00:04:14]100%. Mark, good to see you this morning. Cheers. Take care. Mark Richardson, investment advisor. Thanks to our partners Forsyth Barr this morning.