Kiwi

New Zealand Dollar (NZD) — Overview

The New Zealand dollar (NZD), often shown as $ or NZ$, is the official currency of New Zealand and is subdivided into 100 cents. The NZD is also used in the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. Informally it is called the “Kiwi,” after New Zealand’s native flightless bird that appears on one side of the $1 coin.

History and evolution

• Decimalization: In 1967 New Zealand replaced the pound (pounds, shillings, pence) with the dollar at a rate of 2 NZD = 1 NZ pound, dividing the dollar into 100 cents.
• Central bank: The Reserve Bank of New Zealand, established in 1934, became the sole issuer of banknotes.
• Exchange-rate regime: The NZD was initially pegged to the U.S. dollar and went through several fixed-rate arrangements until March 1985, when it was allowed to float freely.
• Design changes: Early coins featured native birds on the reverse and the British monarch on the obverse. Banknote designs have evolved to feature prominent New Zealand figures, flora and fauna.

Polymer banknotes

Since 1999 New Zealand has issued polymer (plastic) banknotes for greater durability and security. Polymer notes:
– Last significantly longer than paper notes (estimated about four times).
– Offer enhanced anti-counterfeiting features.
– Survive routine washing without material damage.
The most recent major update to designs and security features occurred in 2016.

NZD in foreign exchange

• Quotation: The NZD/USD pair is quoted in U.S. dollars per one New Zealand dollar. For example, NZD/USD = 1.50 means 1 NZD buys 1.50 USD.
• Drivers of value:
• Interest rate differentials between the Reserve Bank of New Zealand (RBNZ) and other central banks (notably the U.S. Federal Reserve) significantly influence NZD movements.
• Commodity prices—particularly dairy (New Zealand is a major exporter of whole milk powder)—affect export revenues and therefore the currency.
• Tourism flows: stronger tourism receipts tend to support NZD.
• Risk sentiment and carry-trade flows: NZD has historically been a higher-yielding currency that attracts carry trades (borrowing in low-yield currencies to invest in NZD), which can amplify moves.
• Correlations: NZD often shows a positive correlation with the Australian dollar (AUD).

Is the NZD a good currency to trade?

The NZD is one of the more actively traded and liquid currencies in forex markets. Its liquidity, sensitivity to interest-rate differentials, and exposure to commodity and tourism cycles make it popular with traders seeking yield and commodity-linked exposure. However, like all currencies it can be volatile during global risk-off episodes.

Appearance

New Zealand coins and banknotes are vibrant and distinct. Designs commonly feature:
– Native birds and plants.
– Important historical New Zealand figures.
– Bright, easily distinguishable colors across denominations.

Key takeaways

• NZD (New Zealand dollar) is the official currency of New Zealand and several nearby territories; abbreviation: NZD.
• Decimal currency adopted in 1967; the NZD floated freely from 1985.
• Polymer banknotes since 1999 provide greater longevity and security.
• NZD value is influenced by interest-rate differentials, dairy prices, tourism, and global risk sentiment.
• The NZD is liquid and commonly used in carry trades; it often moves in line with the Australian dollar.