New Zealand bill denominations include $5, $10, $20, $50, and $100. The New Zealand dollar contributes greatly to the total global exchange market—far in excess of New Zealand’s relative share of population or global GDP. Other factors affecting the NZD are dairy prices and tourism numbers. New Zealand is one of the world’s biggest exporters of whole milk powder.
Decimalization of the NZD (division into 100 cents) took place in 1967 when the New Zealand dollar replaced the New Zealand pound at a rate of two dollars to one pound. Initially pegged to the United States dollar, NZD went through a series of changes in the fixed exchange rate until March of 1985, when the currency was allowed to float freely. New Zealand markets are the Benefits of leverage first to open a new trading day, and banks and traders may at times use this fact to position trades in anticipation of the coming day’s events. NZD is one of the most traded currencies in the world, making it a liquid currency in forex markets. Traders purchase the New Zealand dollar and sell a lower-yielding currency to execute a carry trade, such as the Japanese yen.
- The foreign exchange designation for the New Zealand dollar is NZD.
- The kiwi also circulates in Tokelau, Pitcairn Islands, Niue, and the Cook Islands in addition to being the official currency of New Zealand.
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- Tourism is a strong economic driving force for New Zealand, so when tourism is doing well in the country, the currency will tend to be stronger.
- In 1967, notes were introduced in denominations of $1, $2, $5, $10, $20 and $100, with all except the $5 replacing their pound predecessors.
- Those modern art and sculpture themed designs were leaked to a newspaper and met a very negative public reaction.
It took another 30 years before the Reserve Bank replaced the currency of pounds, shillings, and pence with actual dollars and cents. In the year 1967 alone, the Bank printed 27 million new banknotes and 165 million new coins. In fact, during the 1800s, New Zealand used its coins and banknotes before British currency was even legal currency. However, nothing was made official until 1933, when New Zealand issued their first official coins, based on the British pound, shilling, and pence.
So if milk prices are on the rise, the New Zealand economy is likely to improve and traders may price up the currency in anticipation. Tourism is another staple of the New Zealand economy, so as visits to New Zealand become less expensive, the economy will be expected to improve and the currency may appreciate. Australia ranks as New Zealand’s second-largest trading partner behind China. The neighboring country reports 6.2% of New Zealand imports in 2023. The performance of Australia’s economy has a significant impact on the New Zealand dollar as a result. The most recent issue of New Zealand banknotes is the seventh series, first released in October 2015 and May 2016.
Economic Calendar
These percentages show how much the exchange rate has fluctuated over the last 30 and 90-day periods. These are the lowest points the exchange rate has been at in the last 30 and 90-day periods. These are the highest points the exchange rate has been at in the last 30 and 90-day periods. The NZD/USD is also affected by factors that influence the value of the New Zealand dollar and/or the U.S. dollar in relation to each other and other currencies.
Xe Rate Alerts
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This means that if milk prices are on the rise the New Zealand economy is likely to be doing well, which will push up the currency. Since 1999, the New Zealand government has produced polymer or plastic versions of the New Zealand dollar, which has made the note more secure against counterfeiting. In addition, the new polymer composition has increased the longevity of the note. Investopedia does not provide tax, investment, or financial services and advice.
The country’s top industries include agriculture, dairy, forestry, fishing, mining, and tourism. New Zealand is one of the world’s largest exporters of whole milk powder so the NZD would most likely benefit if milk prices rise. Polymer bills can go through a washing machine without suffering any material damage.
However, overall, NZD is considered a stable currency due to the strength of the New Zealand economy and its outlook. Tourism is a strong economic driving force for New Zealand, so when tourism is doing well in the country, the currency will tend to be stronger. Other economic factors, such as growth rate, GDP, unemployment, https://www.topforexnews.org/news/guide-to-broker-dealer-registration/ and inflation are strong and, therefore, lead to a strong currency. In 1934, the Reserve Bank of New Zealand was established, becoming the only supplier of banknotes. The original notes had a variety of designs, including that of a kiwi, the nation’s Coat of Arms, Maori King Tawhiao, and Fiordland’s Mitre Peak.
Current circulating coins
For this reason, the interest rate differential between the Reserve Bank of New Zealand (RBNZ) and the Federal Reserve (Fed) will affect the value of these currencies when compared to each other. The first coins had pictures of the native birds of New Zealand on the “tails” side, a tradition that has continued, with the British monarch on the head side. The Xe Rate Alerts will let you know when the rate you need is triggered on your selected currency pairs. Gross domestic product is a measurement of the value derived from a country’s production of goods and services over a specific period. Tourism accounted for about 3% of the country’s gross domestic product (GDP) in March 2022, a decrease from 5.5% before the COVID-19 pandemic.
New Zealand’s Currency: Overview and History of the NZD
New Zealand’s central bank, the Reserve Bank of New Zealand, chose to drop the kiwi’s peg to the US dollar when the United States abandoned the gold standard in 1971. From then until 1985, the New Zealand dollar value was pegged to a trade-weighted basket of currencies. During the turbulence in global financial markets during mid to late 2008, the cumulative net long positions held by Japanese margin traders in the NZD fell by nearly 90%. The NZD currency has a long history of colorful and vibrant money and, since its first issuing, has changed its printed design several times.
The interest rate differential between the Reserve Bank of New Zealand and the U.S. Federal Reserve (Fed) will affect the value of these currencies when compared to each other. When the Fed intervenes in open market activities to make the U.S. dollar stronger, for example, the value of the NZD/USD cross could decline, due to a strengthening of the U.S. dollar when compared to https://www.forex-world.net/currency-pairs/aud-nok/ the New Zealand dollar. NZD/USD is the abbreviation for the New Zealand dollar and U.S. dollar currency pair. A price quote for this currency pair tells the reader how many U.S. dollars are needed to purchase one New Zealand dollar. The kiwi also circulates in Tokelau, Pitcairn Islands, Niue, and the Cook Islands in addition to being the official currency of New Zealand.
From 1985 forward, the kiwi was allowed to float in the foreign exchange market freely. However, New Zealand’s central bank occasionally intervenes in the forex market, selling large quantities of kiwi dollars in order to prevent the currency from increasing further in value. It is a measure frequently undertaken by a country’s central bank in order to keep its export products attractively priced to foreign buyers. The idea of decimalization was first raised in 1933, but was not put into place until 1967, when the New Zealand Dollar replaced the New Zealand Pound. There was much public discussion over what the new currency would be called, with ideas such as ‘kiwi’ and ‘zeal’ being proposed, but in the end, the term ‘dollar’ was chosen.
Although sometimes denoted as NZ$, the kiwi dollar is more commonly shown with a simple $ sign. It floated on March 4, 1985, at an initial exchange rate of 44 cents against the U.S. dollar. The financial markets have since determined the currency’s value with the unit typically ranging between 39 and 88 cents against the greenback. The foreign exchange designation for the New Zealand dollar is NZD.
New Zealand’s currency is also the legal tender in the Pitcairn Island and the Cook Islands, and in Tokelau, Niue, and the Ross Dependency, a region in Antarctica claimed by New Zealand. The currency usually has a bird on one side of a banknote or coin as well as an important historical figure of New Zealand. The strength of a currency tends to fluctuate so the strength of the NZD may not always be so strong.