New Zealand’s Currency: Overview and History of the NZD

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Because of this, investors will often buy the NZD and fund it with a lower yielding currency such as the Japanese yen or the Swiss franc. Traders purchase the New Zealand dollar and sell a lower-yielding currency to execute a carry trade, such as the Japanese yen. The objective is to profit from the interest rate differential.

  1. New Zealand currency has had a long history of over 160 years.
  2. Use our Transport finder below to check prices on supplier websites or contact them directly.
  3. Since that year, there have been no coins under the value of five cents and the value of cash transactions are rounded.
  4. Until that point, both British and Australian coins circulated in New Zealand, and continued to do so until 1897.
  5. On 11 November 2004 the Reserve Bank announced that it proposed to take the 5c coin out of circulation and to make the 50c, 20c and 10c coins smaller and use plated steel to make them lighter.

The Pound banknotes were produced by the six different trading banks until 1924, when a single uniform design was implemented. A decade later, the Reserve Bank of New Zealand was established. It took another 30 years before the Reserve Bank replaced the currency of pounds, shillings, and pence with actual dollars and cents.

Notes

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. The NZD is affectionately referred to as the ‘Kiwi,’ in honor of a flightless bird called a kiwi, which is pictured on one side of the country’s $1 coin. The Xe Rate Alerts will let you know when the rate you need is triggered on your selected currency pairs.

The NZD currency has a long history of colorful and vibrant money and, since its first issuing, has changed its printed design several times. Our currency rankings show that the most popular US Dollar exchange rate is the USD to USD rate. Compare our rate and fee with our competitors and see the difference for yourself. Create a chart for any currency pair in the world to see their currency history. These currency charts use live mid-market rates, are easy to use, and are very reliable. The U.S. dollar is the currency most used in international transactions.

Understanding NZD/USD (New Zealand Dollar/U.S. Dollar)

The coins were demonetised on 30 April 1990.[19] The lack of 1c and 2c coins meant that cash transactions were normally rounded to the nearest 5c (10c from 2006), a process known as Swedish rounding. In 1971 the US devalued its dollar relative to gold, leading New Zealand on 23 December to peg its dollar at US$1.216 with https://g-markets.net/ a 4.5% fluctuation range, keeping the same gold value. From 9 July 1973 to 4 March 1985 the dollar’s value was determined from a trade-weighted basket of currencies. NZD/USD is 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.

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. The New Zealand Dollar was initially pegged to the US Dollar at a rate of 1.62 USD to 1 NZD. The peg rate changed multiple times until 1985, when the currency began to freely float in the market. In 1979, a new design for the New Zealand Dollar was released in an attempt to modernize, with the new bills being made of polymer.

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Each banknote and coin of New Zealand’s currency looks different. 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. However, overall, NZD is considered a stable currency due to the strength of the New Zealand economy and its outlook.

Introduced in 1967, the dollar is subdivided into 100 cents. Altogether it has five coins and five banknotes with the smallest being the 10-cent coin; smaller denominations have been discontinued due to inflation and production costs. NZD is one of the most thomas karlow traded currencies in the world, making it a liquid currency in forex markets. New Zealand currency has had a long history of over 160 years. In fact, during the 1800s, New Zealand used its coins and banknotes before British currency was even legal currency.

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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. 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. The New Zealand dollar also circulates in the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. It is often informally known as the “Kiwi (dollar)” and is divided into 100 cents. Bank opening hours in New Zealand vary, but branches are generally open from 9.30am to 4.30pm Monday to Friday.

Wise gives you the real, mid-market, exchange rate, so you can make huge savings on your international money transfers. 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 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. Introduced in 1840, the New Zealand Pound was the first official currency of New Zealand. Until that point, both British and Australian coins circulated in New Zealand, and continued to do so until 1897.

On the introduction of the dollar, coins came in denominations of 1c, 2c, 5c, 10c, 20c, and 50c. The obverse designs of all the coins featured Arnold Machin’s portrait of Queen Elizabeth II, with the legend ELIZABETH II NEW ZEALAND [date]. The reverse sides of coins introduced in 1967 did not follow the designs that were originally intended for them. Those modern art and sculpture themed designs were leaked to a newspaper and met a very negative public reaction. The final releases were given more conservative designs in line with public expectations.

Since that year, there have been no coins under the value of five cents and the value of cash transactions are rounded. They add hidden markups to their exchange rates – charging you more without your knowledge. Banks and traditional providers often have extra costs, which they pass to you by marking up the exchange rate.

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.

Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto capacity. Such trades are for risk-seeking investors and tend to be closed out when investors become risk averse. Evidence of this was prevalent during the 2008 financial crisis when the NZD fell close to 50% against the Japanese yen. As volatility rose, investors unwound these carry trades, and the NZD was one of many high-yielding currencies that fell during 2008 and 2009.

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. The kiwi also circulates in Tokelau, Pitcairn Islands, Niue, and the Cook Islands in addition to being the official currency of New Zealand. New Zealand bill denominations include $5, $10, $20, $50, and $100. The most recent issue of New Zealand banknotes is the seventh series, first released in October 2015 and May 2016. On 11 November 2004 the Reserve Bank announced that it proposed to take the 5c coin out of circulation and to make the 50c, 20c and 10c coins smaller and use plated steel to make them lighter.

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