New Zealand Dollar – Currency Overview

• ISO Code: NZD
• Symbol: $
• Subunit: 1/100 cent
• Inflation: 2.6%
• Nickname: Kiwi

Historical Overview

The New Zealand pound was replaced in 1967 by the New Zealand dollar at a rate of 2 dollars = 1 pound when the country decimalized its currency. The NZ dollar was then pegged to the US dollar at a rate of US$1.39 = NZ$1. This rate changed later that same year to US$1.12 = NZ$1 due to the devaluation of the British pound although New Zealand was devalued more than the U.K.

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In 1971, the U.S decreased the value of its dollar relative to gold, which leadNew Zealand to peg its dollar at US$1.216 to NZ$1. Then from 1973 to 1985 the dollar's value was determined from a trade-weighted basket of currencies, until it was finally floated in 1985 at 0.4444 USD. Since then the NZ dollar's value has been ranging at about 0.39–0.82 United States dollars.

Current Global Status

The New Zealand dollar's rate is significantly vulnerable to currency trading which may account for its status as one of the 16 most traded currencies in the world. In 2007, the Reserve Bank attempted to drive down its value by selling an unidentified amount of New Zealand dollars, marking the first intervention in the markets by the Bank since the float in 1985. It has attempted two further interventions since, however they were not as successful as the first which to be initially effective. However, within a month the NZ dollar reached new post-float highs at 0.8103 U.S. dollars on July 23 2007.

Against the USD

In the aftermath the breakdown of the Bretton-Woods system in 1971, New Zealand converted the mostly-fixed foreign exchange regimes to a moving peg against the U.S. dollar, before floating its currency is 1985. Since the late 1990s the influence of the US Dollar over the value of the NZD has been steadily diminishing. November 2000 saw the NZ dollar's post-float minimum value at 0.3922 U.S. dollars, February 2008 saw its maximum at 0.8213 USD. Much of this variation has been attributed to differences in interest rates.

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