What Would Happen to the NZ Dollar When the US Dollar Collapses?

Estimated reading time: 8 minutes

If the US dollar Collapses, Would the New Zealand Dollar Soar — or Sink?

As global markets grapple with renewed economic uncertainty in 2025, the New Zealand dollar (NZD) has become a currency to watch. The Reserve Bank of New Zealand recently slashed interest rates to a three-year low of 3.00%, weakening the Kiwi against major peers. Yet despite this, the NZD has shown a surprising degree of resilience — bouncing off its 200-day moving average to briefly touch 0.5864 against the US dollar. While this may suggest a short-term recovery, the longer-term chart reveals a persistent downtrend in place since 2021.

This mixed picture raises an important question: if the US dollar were to collapse, would the New Zealand dollar soar — or sink alongside it? In this article, we explore what happens to the Kiwi when the greenback stumbles, how gold and silver fit into the equation, and why many are looking to precious metals for protection.

A question from reader Francois still feels just as relevant in 2025 as it did when we first received it:

“Have you seen any (intelligent) analysis to indicate what would happen to the NZ Dollar when the US Dollar collapses?”

With the NZD hovering near multi-year lows, a more dovish Reserve Bank, and the global conversation around de-dollarisation heating up — this question is likely once again on the minds of many New Zealanders. So let’s dive in…

Has the NZ Dollar Really Been Rising?

While the NZ dollar has bounced back from its early-2025 lows — rising around 5% from its January bottom near 0.56 — it remains firmly within a long-term downtrend against the US dollar. The recent rebound, marked by a move back above its 200-day moving average, may suggest short-term technical strength. But the broader view tells a different story: with the Reserve Bank of New Zealand cutting interest rates to a three-year low and global investors still favouring safe havens like the US dollar and gold, the Kiwi remains fundamentally weak.

So Would This Rising NZ Dollar Change in a US Dollar Collapse?

The most obvious thought might be that if the US dollar were to collapse or massively lose value, then the NZ dollar might rise massively against it. However there is another side to consider.

Despite the NZ dollar’s short-term bounce in 2025, a collapse of the US dollar would likely cause far greater ripples than the Kiwi could withstand. It’s important to remember that the NZD is a minor, peripheral currency — heavily influenced by global trade flows, commodity demand, and offshore investor sentiment.

In a true USD collapse scenario — whether driven by a debt crisis, runaway inflation, or de-dollarisation — the global financial system would be thrown into disarray. While some might expect the NZD to benefit as the USD falls, history and logic suggest otherwise. Investors tend to flee from smaller currencies into hard assets or more liquid, widely held ones. That often means gold, silver, and possibly other reserve currencies, but not the NZ dollar.

In fact, the Kiwi could be hit hard in such an environment. Why? Because foreign capital would likely exit New Zealand markets, the Reserve Bank might be forced to respond with further monetary easing, and global demand for NZ exports could drop in a broader contraction. All of this weakens the NZD — not strengthens it.

Rather than being the first to fall, the US dollar could be the last — not because it’s immune, but because it sits at the centre of the current global monetary system. Historically, currency crises often begin at the periphery and move inward. This would explain why emerging markets are hit hardest first, while the USD gains ground — at least initially.

Take the US freezing Russian foreign currency reserves after the invasion of Ukraine. Ructions like these could encourage China and other nations to reduce their reliance on the US dollar for settling international payments (they likely already are).

But here’s the paradox: while the world becomes more multipolar, every fiat currency is still priced relative to the USD. The dollar functions as the central reference point for global trade. If the USD were to truly collapse, all currencies that depend on it — including the NZD — would feel the effects.

As monetary analyst Sandeep Jaitly once said (and later echoed by Ronald Stoeferle during his visit to New Zealand), a collapse may begin at the periphery — emerging markets, weak currencies — and slowly work inward. In that case, the US dollar might not be the first to collapse. It could be the last — the final domino in a system-wide event.

So if you’re holding NZ dollars thinking they’ll outperform in a USD collapse… it may be worth reconsidering.

What Happens If the USD — the Global Reference Point — Collapses?

Every major fiat currency today is priced in relation to the US dollar. So if the USD truly collapses, the entire global monetary system will feel the impact. And while many expect other currencies to strengthen if the dollar weakens, the opposite is more likely — especially in the short term.

In fact, we’ve seen this play out before: in both the 2008 financial crisis and the early COVID panic, capital fled risk assets and smaller currencies like the NZD, and flooded into the relative “safety” of US Treasuries. That initial surge into the dollar caused most other currencies to fall even faster against gold.

Only later — once confidence in the dollar began to falter — did we see a second wave: a flight into gold.

This staged progression is why analysts like Sandeep Jaitly and Ronald Stoeferle argue that the US dollar may actually be the last fiat currency to fail — not the first. As Stoeferle said in a Q&A in Auckland:

“The US is so dominant militarily and institutionally that it may hold onto its reserve currency status far longer than people think.”

For New Zealanders, this means that the NZD could weaken sharply against the USD even before the dollar itself is under real threat — let alone gold. So while many focus on a “US dollar collapse,” the real concern for Kiwi savers may be a NZ dollar collapse first… with gold potentially rising sharply in NZD terms as a result.

Why Gold and Silver Still Matter — Especially in a Currency Collapse

If both the NZD and USD are vulnerable in a global monetary reset, then it makes sense to consider alternatives that don’t rely on any government’s promises. This is where gold and silver come into their own.

These precious metals have acted as money and stores of value for thousands of years. Unlike fiat currencies, gold and silver can’t be printed, devalued by central banks, or rendered worthless by political decisions. They remain globally recognised, borderless, and independent of the banking system.

In fact, history shows that during times of monetary upheaval — whether it’s inflation, devaluation, or systemic collapse — gold and silver tend to rise in value, especially when measured in weakening local currencies like the NZD.

We’ve already seen this in the past decade. While the NZD has lost purchasing power, gold in NZ dollars has reached new highs, acting as a true hedge for Kiwi savers.

Central banks know this too — in recent years, central bank gold buying has increased at record pace, especially in nations looking to reduce reliance on the US dollar.

So if you’re wondering how to protect your purchasing power in the face of global monetary instability, gold and silver offer a proven answer. They’re not speculative bets — they’re monetary insurance.

Protect Your Wealth – Start with Real Money

If the NZ dollar weakens and the global financial system comes under stress, what will you have that holds its value?

Gold and silver have stood the test of time — and they’re still available to New Zealanders looking for security outside the banking system.

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Related reading: In a US Dollar Collapse Won’t The Rising NZ Dollar Cancel Out Any Gold/Silver Gains?

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Editors note: This post was originally posted 4 July 2014. Last updated 25 August 2025 with new chart and fully updated content.

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