New Zealand Dollar (NZD)

The New Zealand dollar is the decimal-based currency system of New Zealand. Like other dollar-based systems, its symbol is the $ sign and differentiated from other dollar-based systems as NZ$ or NZD.

The currency system comprises both coins and banknotes. The coin denominations include 10c, 20c, 50c, $1 and $2. Banknotes continue the currency denominations: $5, $10, $20, $50 and $100 notes complete the in-circulation line. Both coinage and banknotes have different sizes and colours from others in addition to many other publicised and undisclosed anti-forgery devices incorporated into the designs of the banknotes.

The New Zealand dollar was created in 1964 to separate the currency system from the confusion between the New Zealand pound and the British pound. Physical currency was issued on ‘Decimal Day,’ 10 July 1967.

The NZD is among the top 10 currencies most traded on global currency exchange markets, estimated at a trading volume of 1.6 percent of all trades during 2010. The daily base value of the currency is determined by the New Zealand national bank, but the fiat currency is subjected to many exchange-rate fluctuations each trading day.

Relative value for the NZD is compared to and traded against the relative value of other currencies. The fiat currency is not linked to the value of any other commodity and is subjected to influences that increase or decrease its perceived valuation. Inflation, economic strength, national debt, civil unrest and political landscape are only a few of the currency value determining points.

Because the NZD has been a fiat currency for an extended time, inflation has been a major influence in the currency’s traded value in both short-term and long-term trading positions.

The New Zealand dollar removed itself from the gold standard in 1971 when the Bretton Woods currency exchange system failed. New Zealand pegged its currency system instead to a mostly-fixed rated pegged to the United States dollar or USD.

However, since the end of the Cold War, the USD has held decreasing influence on the relative value of the New Zealand dollar, which financial markets nickname ‘kiwi’ in honour of the country’s well-known fruit and to casually differentiate it from other dollar-based currency systems.