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You are here: Home / Learn forex trading / Forex Glossary / Forex terms / New Zealand Dollars

New Zealand Dollars

June 10, 2018 by Forex guru

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New Zealand Dollars
It is New Zealand’s currency. NZD is its currency code.

If you interested in NZDUSD trading see latest values and NZDUSD chart.

As can be seen from the name, the New Zealand dollar is used by New Zealand as its legal tender and currency. It is however also used by other independent countries and areas close to New Zealand, including Pitcairn Islands, a British territory, the Niue, Cook Islands, Tokelau and the Ross Dependency. The dollar ($) is mostly used as an abbreviation, while “NZ$” is commonly used to differentiate it from other countries that uses the dollar. The NZ$ is also informally known as the “Kiwi”. This is due to the fact that New Zealand is often associated with this bird which is indigenous to the country, and also depicted on the 1 dollar coin. The currency’s international currency code is NZD, as opposed to USD for the American dollar.
In 1967, the NZD was introduced and it is divided into 100 c. Although the original denominations included a 1c, 2c and a 5c, these were eventually withdrawn due to production costs and inflation. Nowadays the currency has to denominations of which 5 are coins and 5 are banknotes. Although New Zealand is a small island country, the NZD is regularly one of the ten currencies most traded in the world.

Before the NZD was introduced, the country’s currency was the New Zealand pound. Since 1933, the pound had been separate from the British pound and used the Lsd system, where there are 20 shillings in a pound and 12 pence in one shilling.
Since the 1930s, New Zealand has considered switching to a decimal currency, but it was only in late 1955 that the currency was finally considered too cumbersome and complicated, and plans were made to change it. Government set up a committee to consider using a decimal currency in 1957, and the decision to decimalize New Zealand’s currency was taken in 1963, followed in 1964 by the passing of a relevant Act for a decimal currency. The transition date was set to July 10, 1967. To avoid using the word “dollar”, alternative names including zeal, kiwi and fern were proposed. In spite of these suggestions, dollar was used in the end and “Mr. Dollar”, cartoon character depicting a dollar note was used as a symbol for transition in massive publicity campaigns.

The NZD was introduced on Monday July 10, 1967 the pound was replaced at 2 dollars per pound. 165 million new coins were minted and 27 million new banknotes were printed for the change.

Exchange rate
The NZD was initially linked to the American dollar at a rate of NZD 1 = USD 1.43. This changed to NZD 1 = USD 1.12 on November, 21 1967 after the GBP was devalued.
When the USA devalued the USD relative to gold in 1971, New Zealand followed by pegging its currency at NZD 1 = USD 1.216, maintaining an equivalent gold value with a fluctuation range of 4.5%. Between July 1973 and March 1985 the NZD’s value was calculated from a basket of currencies that was trade-weighted.
On March 4, 1985, the NZD was floated at a rate of USD 0.4444. Its value has been dependent on financial markets since then, and has been between USD 0.88 and 0.39.

The NZD’s low was reached on November 22, 2000 at USD 0.3922, while a high of USD 0.8821 was achieved on July 9, 2014, with most of the variation being attributed to interest rate differences.
Currency trading often strongly affects the NZD’s value and it remains one of the currencies in the world most traded.
The New Zealand Reserve Bank sold NZD worth nine billion USD on June 11, 2007, trying to decrease its value. This was the first time the Bank intervened in the markets since the currency was floated.
It is suspected that there were another two interventions, but these were not really successful. Although the 1st seemed to be effective when the NZD dropped to approximately USD 0.7490 from USD 0.7620 initially, within a mere month it rose to new heights and reached USD 0.8103.

After it reached a record high early in 2008, the NZD’s value dropped sharply throughout Q3 and Q4 of 2008, and Q1 of 2009. This was due to investors moving away from “uncertain” currencies including the NZD during the global economic downturn. The NZD reached a low of USD 0.50 on March 6, 2009, but it rallied strongly during the rest of the year and reached the USD 0.75 mark by Nov 2009.

The NZD was trading consistently above 0.80 USD by late 2012, even reaching 85c occasionally. This prompted the Green Party and the unions to call on the Reserve Bank and the Government for quantitative easing, but both had declined as at February 2013.
As of June, 2018, the NZD was trading at about USD 0.70.

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