The New Zealand Dollar (NZD, symbol $) is the national currency of New Zealand, as well as dependent Territories such as Niue, Cook Islands and Tokelau. In the international currency market, it is often called "kiwi", in honor of the famous bird, the symbol of New Zealand.
Until 1967, the country used the New Zealand pound system, but it was inconvenient to use it, especially for settlements with international partners. As a result, New Zealand switched to the decimal monetary system, replacing pounds with dollars at a 2:1 exchange rate.
Since then, the New Zealand dollar has gone through several stages of evolution.:
Until 1985, its exchange rate was rigidly pegged to a basket of currencies.
In 1985, the country switched to a floating exchange rate, and since then the NZD has been freely traded on the Forex market.
The New Zealand economy is heavily dependent on exports of dairy products, meat, wool and timber. Therefore, the price of NZD often correlates with global commodity prices. If, for example, the price of milk increases, it strengthens the kiwi exchange rate.
The central bank actively uses interest rates to manage the economy. If RBNZ raises the rate, investors are more willing to buy the NZD, which leads to its strengthening.
The NZD and AUD often move in the same direction, as the economies of Australia and New Zealand are closely linked. However, there are times when the New Zealand dollar deviates from the trend of the Australian dollar.
The NZD is considered a risky currency, therefore, during periods of global crises, its exchange rate may fall, as investors switch to more stable assets, for example, the US dollar (USD) or the Japanese yen (JPY).
The NZD is one of the ten most traded currencies in the world, and its main pairs are:
NZD/USD is the most popular pair reflecting the strength of the kiwi against the US dollar.
AUD/NZD – shows which of the two oceanic economies is stronger at the moment.
NZD/JPY is a popular pair among investors who are looking for a difference in interest rates.
