But let’s be honest, for many Kiwis it is all about the price of that overseas holiday.
Unluckily for me as a tourist, the Kiwi dollar is under pressure as the US greenback rises on expectations for higher interest rates next year after Donald Trump’s inflationary tariff policies.
Luckily for me as a business journalist, that’s making it interesting to write about.
For the record, the Kiwi was sitting at US58.60c on Friday afternoon. In the past two months, it has slid down from a peak at US63c in September.
Where’s it headed next? Well, first it’s important to remember that picking currencies is one of the hardest forecasting games in town.
It’s a volatile market where currencies swing daily on geo-political news, economic data, central bank calls and what is sometimes seemingly the whims of international traders.
Thanks in part to the New Zealand economy’s reliance on agricultural output, and therefore the weather, the Kiwi dollar is more considered a good punt for those traders - more volatile than many other currencies.
It has traditionally been one of the top traded currencies in the world despite being very much a minor in terms of relative scale.
But for all that volatility and uncertainty, market economists have to forecast a path for the currency and find narratives that might offer some logic to their picks.
What makes it so interesting right now is the huge uncertainty about what’s going to happen in the US next year when Donald Trump takes the presidency.
BNZ currency strategist Jason Wong produced a report earlier this month looking at what “Trump 2.0″ does to his currency projections.
He’s naturally cautious about predicting his policy moves but settles on a solid baseline about the direction we’re headed.
“Without getting too bogged down in policy detail at this juncture, we need to put a line in the sand and propose some updated currency forecasts,” he wrote.
“We warn though that today’s line in the sand is apt to get washed away on several occasions as we go through 2025 and gaps open between US policy conjecture and reality.”
But with that caveat, Wong builds a central case that involves Trump delivering broadly on the tax cuts and tariffs without going as far as he promised on the campaign trail.
I think that’s the most likely scenario too.
Even that doesn’t look great for the Kiwi. Wong sees the seasonal factors - like a good dairy return - keeping the dollar propped up between US59c and US60c until the rest of the year.
But then as the Trump effect kicks in (with the inauguration on January 20) he sees it drifting in a range between 0.57c-0.58c but with a chance “that a low of 0.55 could be reached at some stage.”
The outlook is mostly driven by the US side of the equation, Wong says.
That’s because the central market narrative right now is that Trump’s tariffs will cause inflation and his tax cuts will blow out the US deficit requiring more bond issues to raise debt.
That’s pushed up the pricing of US bond yields which implies higher interest rates than there might have otherwise been.
For all the factors that can influence a nation’s currency, the return that traders can get for holding its cash remains the number one driver.
So ...
It is worth noting that other economists are holding fire on downgrading the outlook. ANZ released its quarterly outlook last week and stuck with forecasts for gradual appreciation to 0.62c by year-end, and 0.63 by the end of 2025.
This would be supported by stronger commodity prices (particularly dairy) and a “gravitational pull back to fair value, which we see at 0.62”, they said.
They do note downside risks based on US policy decisions but that is still quite a divergence in views.
My holiday plans aside, a lower Kiwi isn’t necessarily bad news. The fact that it floats gives our economy a good hedge. Exporters facing headwinds from Trump tariffs next year will see their pricing for US consumers improve as our dollar falls.
Of course, it’s not much good for the price of our imports and could push the price of petrol and food up again next year.
That means more upward inflationary pressure than we might have otherwise had and will limit the Reserve Bank’s power to slash rates too far - even if the economy remains flat.
Such is the power of the US dollar in the world. Where they go the rest of the world will follow ... even if begrudgingly.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
