Travellers urged to get cash now

Gary and Diane Stewart keep an eye on the dollar before they go overseas.

If you're planning a trip overseas in the next year, consider buying your foreign currency now.

The New Zealand dollar has been strong for some time but has fallen over the past few weeks, from more than US.82c in mid-September to about US.79c this week. Economists expect it to continue to fall over the next year.

Scott McCullough, of Flight Centre's Travel Money, said it was prompting travellers to buy their foreign exchange now, to lock in some certainty about their spending money. "The most popular foreign currencies that are pre-purchased include the US dollar, the Euro and the Australian dollar."

Diane Stewart and husband Gary are keeping a close eye on the New Zealand dollar for their trip to Australia in January for their daughter's wedding.

Stewart says if it slips any more in the next couple of weeks, they will take the plunge. "I am a bit of a gambler when it comes to deciding and sometimes I lose and sometimes I win."

Stewart likes to have cash in her pocket when overseas. "It is much easier to pick up the tab when trying to spoil the family. I love being able to push in front and hand it over before my daughter can stop me. I just wish I had a crystal ball to know when to buy the better rate."

ASB chief economist Nick Tuffley expected the New Zealand dollar to track lower against the US, Australian, British and Euro currencies over the next year.

He expected the most movement against the US dollar.

Theoretically, travellers would get the best rate now but there were also likely to be short-term bounces over the year.

Cameron Bagrie, ANZ's chief economist, agreed the dollar would likely be weaker in 12 months. Commodity prices pointed to a big drop but New Zealand interest rates were still higher than most, which would moderate the fall.

He said the uncertainty was China. "Historically, when the dollar corrects, it corrects an awful long way but that has been linked with a global event ... the Asian crisis, the dotcom bubble, the GFC.

"If the China economy holds up, the NZ dollar will hold up. If the China story deteriorates, the NZ dollar and Australian dollar will continue to get whacked."

But he said making month-on-month predictions was not easy. "There will be more flip flops than on the beach at Bondi."