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New Zealand dollar

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The New Zealand dollar (Māori: tāra o Aotearoa; sign: $; code: NZD) is the official currency and legal tender of New Zealand, the Cook Islands, Niue, the Ross Dependency, Tokelau, and a British territory, the Pitcairn Islands.[2] Within New Zealand, it is almost always abbreviated with the dollar sign ($). The abbreviations "$NZ"[1] or "NZ$" are used (outside New Zealand) when necessary to distinguish it from other dollar-denominated currencies.

New Zealand dollar
$NZ[1]
$100 banknote, obverse$1 coin, depicting a kiwi on the reverse, from where the currency gets its informal name, the Kiwi dollar
ISO 4217
CodeNZD (numeric: 554)
Subunit0.01
Unit
Unitdollar
Symbol$‎
Nicknamekiwi
Denominations
Subunit
 1⁄100cent
Symbol
 centc
Banknotes
 Freq. used$5, $10, $20, $50, $100
Coins
 Freq. used10c, 20c, 50c, $1, $2
Demographics
Date of introductionJuly 10, 1967; 57 years ago (1967-07-10)
ReplacedNew Zealand pound
User(s) New Zealand
Issuance
Central bankReserve Bank of New Zealand
 Websiterbnz.govt.nz
PrinterNote Printing Australia (provides base polymer note material)
 Websitenoteprinting.com
MintPrimarily Royal Canadian Mint and Royal Mint (UK), others previously
Valuation
Inflation2.2% (New Zealand only)
 SourceReserve Bank of New Zealand, September 2024
Pegged byCook Islands dollar (historical), Niue dollar and Pitcairn Islands dollar (all at par)

The New Zealand dollar was introduced in 1967. It 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.

In the context of currency trading, the New Zealand dollar is sometimes informally called the "Kiwi" or "Kiwi dollar",[3] since the flightless bird, the kiwi, is depicted on its one-dollar coin. It is the tenth most traded currency in the world, representing 2.1% of global foreign exchange market daily turnover in 2019.[4]

History

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Introduction

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Prior to the introduction of the New Zealand dollar in 1967, the New Zealand pound was the currency of New Zealand, which had been distinct from the pound sterling since 1933.[5] The pound used the £sd system, in which the pound was divided into 20 shillings and one shilling was divided into 12 pence, a system which by the 1950s was considered complicated and cumbersome.

Switching to decimal currency had been proposed in New Zealand since the 1930s, although only in the 1950s did any plans come to fruition.[6] In 1957, a committee was set up by the Government to investigate decimal currency. The idea fell on fertile ground, and in 1963, the Government decided to decimalise New Zealand currency.[7] The Decimal Currency Act was passed in 1964, setting the date of transition to 10 July 1967.[8] Words such as "fern", "kiwi" and "zeal" were proposed to avoid confusion with the word "dollar", which many people associate with the United States dollar.[9][10] In the end, the word "dollar" was chosen anyway, and an anthropomorphic dollar note cartoon character called "Mr. Dollar" became the symbol of transition in a huge publicity campaign.[11]

On Monday 10 July 1967 ("Decimal Currency Day"), the New Zealand dollar was introduced to replace the pound at a rate of two dollars to one pound (one dollar to ten shillings, ten cents to one shilling, 5⁄6 cent to a penny).[12] Some 27 million new banknotes were printed and 165 million new coins were minted for the changeover.[9]

Exchange rate

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The New Zealand dollar was initially pegged to both the British pound sterling and the United States dollar at NZ$1 = UK£1⁄2 = US$1.40. On 21 November 1967 sterling was devalued from UK£1 = US$2.80 to US$2.40 (see Bretton Woods system), but the New Zealand dollar was devalued even more from NZ$1 = US$1.40 to US$1.12, to match the value of the Australian dollar.[13]

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 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.

On 4 March 1985, the NZ$ was floated at the initial rate of US$0.4444. Since then the dollar's value has been determined by the financial markets, and has been in the range of about US$0.39 to 0.88.

The dollar's post-float low was US$0.3922 on 22 November 2000, and it reached a post-float high on 9 July 2014 of US$0.8821. Much of this medium-term variation in the exchange rate has been attributed to differences in interest rates.[citation needed]

The New Zealand dollar is among the 10 most-traded currencies.[4]

On 11 June 2007 the Reserve Bank sold an unknown worth of New Zealand dollars for nine billion USD in an attempt to drive down its value. This is the first intervention in the markets by the Bank since the float in 1985.

Two suspected interventions followed, but they were not as successful as the first: the first appeared to be initially effective, with the dollar dropping to approximately US$0.7490 from near US$0.7620. However, within little more than a month it had risen to new post-float highs, reaching US$0.8103 on 23 July 2007.

After reaching its post-float record high in early 2008, the value of the NZ$ plummeted throughout much of the 2nd half of 2008 and the first quarter of 2009 as a response to the global economic downturn and flight by investors away from "riskier" currencies such as the NZ$. The NZ$ bottomed out at approximately US$0.50 on 6 March 2009.[14] However, it rebounded strongly as the year progressed, reaching the US$0.75 range by November 2009.[14]

By late 2012, the dollar was holding above 80 US cents, occasionally reaching 85¢, prompting calls from the Green Party for quantitative easing.[15][16] Unions also called on the Government and the Reserve Bank to take action, but as of February 2013 both had declined.[17]

As of early June 2017, the NZD was trading at approximately US$0.71, and in early November 2019 it was valued as US$0.63 = NZ$1.[18]

Coins

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Main article: Coins of the New Zealand dollar

History

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Proposed designs for a $1 (10 shilling) coin

On the introduction of the dollar, coins came in denominations of 1c, 2c, 5c, 10c, 20c, and 50c. The 1c and 2c coins were bronze, the others were cupro-nickel.[19] To ease transition, the 5c, 10c, and 20c were the same size as the sixpence, shilling and florin that they respectively replaced, and until 1970, the ten-cent coin bore the additional legend "One Shilling". 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.

In 1986, New Zealand adopted Raphael Maklouf's new portrait of the Queen. The 1c and 2c coins were last minted for circulation in 1987, with collector coins being made for 1988. 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.

On 11 February 1991, aluminium-bronze $1 and $2 coins were introduced to replace existing $1 and $2 notes.[19] In 1999, Ian Rank-Broadley's portrait of the Queen was introduced and the legend rearranged to read "NEW ZEALAND ELIZABETH II".

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. After a three-month public submission period that ended on 4 February 2005, the Reserve Bank announced on 31 March that it would go ahead with the proposed changes. The changeover period started on 31 July 2006, with the old coins usable until 31 October 2006.[19] The old 50c, 20c, 10c and 5c pieces are now no longer legal tender, but are still redeemable at the Reserve Bank. Prior to the change over, these coins were similar, save for the legend and reverse artwork, to international (mainly Commonwealth) coins of the same British-derived sizes, which led to coins from other currencies, particularly older coins, being accepted by vending machines and many retailers.

Commemorative coins, with face values of 50c, were issued in 2015 and 2018 to mark the centenary of the Gallipoli landings[20] and of Armistice Day.[21]

Current circulating coins

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The reverse designs of the current circulating New Zealand dollar coins. Image by Reserve Bank of New Zealand.
Value Technical Parameters Description Date of issue
Diameter Thickness Mass Composition Edge Obverse Reverse
10c 20.50 mm 1.58 mm 3.30 g Copper-plated steel Plain Queen Elizabeth II A Māori koruru, or carved head 31 July 2006
20c 21.75 mm 1.56 mm 4.00 g Nickel-plated steel "Spanish flower" Queen Elizabeth II Māori carving of Pukaki, a chief of the Ngati Whakaue iwi between traditional koru kowhaiwhai patterns[22] 31 July 2006
50c 24.75 mm 1.70 mm 5.00 g Plain HM Bark Endeavour and Mount Taranaki
$1 23.00 mm 2.74 mm 8 g Aluminium bronze Intermittent milling Queen Elizabeth II Kiwi and silver fern 11 February 1991
$2 26.50 mm 2.70 mm 10 g Grooved Kotuku (great egret)

Future

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After the death of Queen Elizabeth II in September 2022, the Reserve Bank said it would exhaust its existing coin stocks before introducing new coins featuring King Charles III. Based on current stock levels, this would likely be several years away.[23]

Banknotes

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Main article: Banknotes of the New Zealand dollar

History

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In 1967, notes were introduced in denominations of $1, $2, $5, $10, $20 and $100, with all except the $5 replacing their pound predecessors. The original series of dollar notes featured on the obverse a portrait of Queen Elizabeth II wearing Queen Alexandra's Kokoshnik tiara, King George's VI festoon necklace, and Queen Mary's floret earrings, while the reverse featured native birds and plants.[24] The notes were changed slightly in 1981 due to a change of printer (from De La Rue to Bradbury, Wilkinson & Co.)—the most noticeable difference being the portrait based upon a photograph by Peter Grugeon, in which Queen Elizabeth II is wearing Grand Duchess Vladimir's tiara and Queen Victoria's golden jubilee necklace.[24] The $50 note was added in 1983 to fill the long gap between the $20 and the $100 notes. $1 and $2 notes were discontinued in 1991 after being replaced with coins.

A new series of notes, known as Series 5 was introduced in 1992. The obverse of each note featured a notable New Zealander, while the reverse featured a native New Zealand bird and New Zealand scenery. The Queen remained on the $20 note. In 1999, series 6 polymer notes replaced the paper notes. The designs remained much the same, but were changed slightly to accommodate new security features, with the most obvious changes being the two transparent windows.

In 2015–16, new Series 7 notes were issued,[25] refreshing the note design and improving security features. As of 2021, Series 6 and 7 notes are currently legal tender.[26]

In September 2022, following the death of Queen Elizabeth II, the Reserve Bank said it would exhaust its existing stocks of $20 notes before introducing new notes featuring King Charles III.[23]

Current circulating banknotes

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The most recent issue of New Zealand banknotes is the seventh series, first released in October 2015 and May 2016.

Image Value Dimensions Main Colour Description Date of issue
Obverse Obverse Reverse Watermark
  $5 135 × 66 mm Orange Edmund Hillary
Aoraki / Mount Cook
Campbell Island scene
Hoiho (yellow-eyed penguin)
Bulbinella rossii (Ross lily)
Pleurophyllum speciosum (Campbell Island daisy)
Bull kelp 		Elizabeth II October 2015
  $10 140 × 68 mm Blue Kate Sheppard
White camellia flowers 		River scene
Whio (blue duck)
Parahebe catarractae
Blechnum fern 		Elizabeth II October 2015
  $20 145 × 70 mm Green Elizabeth II
New Zealand Parliament Buildings 		New Zealand alpine scene
Kārearea (New Zealand falcon)
Marlborough rock daisy
Red tussock in flower
Mount Tapuae-O-Uenuku 		Elizabeth II May 2016
  $50 150 × 72 mm Purple Āpirana Ngata
Porourangi Meeting House 		Conifer broadleaf forest scene
Kōkako (blue wattled crow)
Supplejack (kareao)
Sky-blue mushroom 		Elizabeth II May 2016
  $100 155 × 74 mm Red Ernest Rutherford
Nobel Prize medal 		Beech forest scene
Mohua (yellowhead)
Red beech
South Island lichen moth 		Elizabeth II May 2016
These images are to scale at 0.7 pixel per millimetre. For table standards, see the banknote specification table. For details of the circulating series 6 designs, see Banknotes of the New Zealand dollar.

In foreign exchange markets

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History

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With the breakdown of the Bretton Woods system in 1971, both Australia and New Zealand converted the mostly-fixed foreign exchange regimes to a moving peg against the US dollar. In September 1974, Australia moved to a peg against a basket of currencies called the trade weighted index (TWI) in an effort to reduce fluctuations associated with its peg to the US dollar. The peg to the TWI was changed to a moving peg in November 1976, causing the actual value of the peg to be periodically adjusted.[27]

Current exchange rates

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Current NZD exchange rates
From Google Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD KRW SGD JPY
From Yahoo! Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD KRW SGD JPY
From XE.com: AUD CAD CHF CNY EUR GBP HKD JPY USD KRW SGD JPY
From OANDA: AUD CAD CHF CNY EUR GBP HKD JPY USD KRW SGD JPY

In currency trading

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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.

According to the Bank for International Settlements, the New Zealand dollar's share of global foreign exchange market daily turnover in 2016 was 2.1% (up from 1.6% in 2010) giving it a rank of 11th.[28] Trading in the currency has climbed steadily since the same survey in 1998 when the NZD's ranking was 17th and the share of turnover was just 0.2%.

Most traded currencies by value
Currency distribution of global foreign exchange market turnover[29]
Currency ISO 4217
code 		Symbol or
Abbrev.[30] 		Proportion of daily volume Change
(2019–2022)
April 2019 April 2022
U.S. dollar USD $, US$ 88.3% 88.5%   0.2pp
Euro EUR € 32.3% 30.5%   1.8pp
Japanese yen JPY ¥, 円 16.8% 16.7%   0.1pp
Sterling GBP £ 12.8% 12.9%   0.1pp
Renminbi CNY ¥, 元 4.3% 7.0%   2.7pp
Australian dollar AUD $, $A 6.8% 6.4%   0.4pp
Canadian dollar CAD $, Can$ 5.0% 6.2%   1.2pp
Swiss franc CHF Fr., fr. 4.9% 5.2%   0.3pp
Hong Kong dollar HKD $, HK$, 元 3.5% 2.6%   0.9pp
Singapore dollar SGD $, S$ 1.8% 2.4%   0.6pp
Swedish krona SEK kr, Skr 2.0% 2.2%   0.2pp
South Korean won KRW ₩, 원 2.0% 1.9%   0.1pp
Norwegian krone NOK kr, Nkr 1.8% 1.7%   0.1pp
New Zealand dollar NZD $, $NZ 2.1% 1.7%   0.4pp
Indian rupee INR ₹ 1.7% 1.6%   0.1pp
Mexican peso MXN $, Mex$ 1.7% 1.5%   0.2pp
New Taiwan dollar TWD $‎, NT$, 圓 0.9% 1.1%   0.2pp
South African rand ZAR R 1.1% 1.0%   0.1pp
Brazilian real BRL R$ 1.1% 0.9%   0.2pp
Danish krone DKK kr., DKr 0.6% 0.7%   0.1pp
Polish złoty PLN zł‎, Zl 0.6% 0.7%   0.1pp
Thai baht THB ฿, B 0.5% 0.4%   0.1pp
Israeli new shekel ILS ₪, NIS 0.3% 0.4%   0.1pp
Indonesian rupiah IDR Rp 0.4% 0.4%  
Czech koruna CZK Kč, CZK 0.4% 0.4%  
UAE dirham AED د.إ, Dh(s) 0.2% 0.4%   0.2pp
Turkish lira TRY ₺, TL 1.1% 0.4%   0.7pp
Hungarian forint HUF Ft 0.4% 0.3%   0.1pp
Chilean peso CLP $, Ch$ 0.3% 0.3%  
Saudi riyal SAR ﷼, SRl(s) 0.2% 0.2%  
Philippine peso PHP ₱ 0.3% 0.2%   0.1pp
Malaysian ringgit MYR RM 0.2% 0.2%  
Colombian peso COP $, Col$ 0.2% 0.2%  
Russian ruble RUB ₽, руб 1.1% 0.2%   0.9pp
Romanian leu RON —, leu 0.1% 0.1%  
Peruvian sol PEN S/. 0.1% 0.1%  
Bahraini dinar BHD .د.ب, BD 0.0% 0.0%  
Bulgarian lev BGN лв., lv., lev 0.0% 0.0%  
Argentine peso ARS $, Arg$ 0.1% 0.0%   0.1pp
Other currencies 1.8% 2.3%   0.5pp
Total: 200.0% 200.0%



See also

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Notes

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References

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  1. ^ a b "World Bank Style Guide" (PDF). World Bank. pp. 134–137.
  2. ^ "New Zealand Dollar (NZD) Profile | Foreign Exchange Conversion - Money Calculator". currency7.com. Retrieved 6 February 2017.
  3. ^ Jazial Crossley (12 March 2012). "Currency | Kiwi Follows Aussie Dollar Down". Stuff.co.nz. Retrieved 23 May 2012.
  4. ^ a b "Foreign exchange turnover in April 2019". 16 September 2019.
  5. ^ Pollock, Kerryn (20 June 2012). "Coins and banknotes - A national currency, 1930s to 1960s". Te Ara: The Encyclopedia of New Zealand. Retrieved 10 May 2020.
  6. ^ Pollock, Kerryn (20 June 2012). "Coins and banknotes - Decimal currency, 1960s to 2000s". Te Ara: The Encyclopedia of New Zealand. Retrieved 10 May 2020.
  7. ^ "Explaining New Zealand's currency" (PDF). Reserve Bank of New Zealand. Archived from the original (PDF) on 12 July 2013. Retrieved 17 August 2010.
  8. ^ "Decimal Currency Act 1964 No 27 (as at 01 February 1990), Public Act Contents – New Zealand Legislation". www.legislation.govt.nz. Retrieved 6 February 2017.
  9. ^ a b "New Zealand adopts decimal currency". nzhistory.govt.nz. Ministry for Culture and Heritage. 10 January 2017. Retrieved 6 February 2017.
  10. ^ "New Zealand dollar". Global Exchange. Retrieved 6 February 2017.
  11. ^ The Film Archive. "Decimal Currency, Mr. Dollar". Archived from the original on 3 August 2012. Retrieved 8 March 2012.
  12. ^ New Zealand official yearbook. Vol. 72. New Zealand Department of Statistics. 1967. p. 1126.
  13. ^ Global Financial Data. "New Zealand Dollar (USD per NZD)". Archived from the original on 29 September 2007. Retrieved 21 May 2007.
  14. ^ a b "New Zealand Dollar to United States Dollar". Google Finance. Retrieved 23 May 2012.
  15. ^ "Greens call for quantitative easing". 3 News NZ. 7 October 2012. Archived from the original on 13 April 2013.
  16. ^ Young, Audrey (8 October 2012). "Labour sees merit in Green call to print cash". The New Zealand Herald. Archived from the original on 17 December 2019.
  17. ^ Jolliff, Emma (27 October 2012). "Govt rejects call to print money". 3 News NZ. Archived from the original on 18 July 2014.
  18. ^ "Historical Rates Tables - NZD". Xe.
  19. ^ a b c d "History of New Zealand Coinage". Reserve Bank of New Zealand. Archived from the original on 23 January 2009. Retrieved 4 April 2009.
  20. ^ "ANZAC Circulating Commemorative Coin". Reserve Bank of New Zealand.
  21. ^ "Armistice Day Coin". Reserve Bank of New Zealand.
  22. ^ Tim Watkin, Figure of unity, NZ Listener, 13–19 November 2004, Vol 196, No 3366. Accessed 14 June 2007.
  23. ^ a b Edmunds, Susan (9 September 2022). "What happens now to New Zealand's coins and bank notes?". Stuff. Retrieved 12 September 2022.
  24. ^ a b Linzmayer, Owen (2012). "New Zealand". The Banknote Book. San Francisco, CA: BanknoteNews.com.
  25. ^ "Issuing series 7 - Reserve Bank of New Zealand". RBNZ. Retrieved 5 March 2022.
  26. ^ "Banknotes in circulation - Reserve Bank of New Zealand". RBNZ. Retrieved 5 March 2022.
  27. ^ Sullivan, Richard (March 2013). "New Zealand History of Monetary and Exchange Rate Regimes" (PDF). Reserve Bank of New Zealand. Retrieved 24 September 2022.
  28. ^ "Triennial Central Bank Survey, April 2013" (PDF). Triennial Central Bank Survey. Bank for International Settlements. Retrieved 25 March 2014. [pg.10 of PDF]
  29. ^ Triennial Central Bank Survey Foreign exchange turnover in April 2022 (PDF) (Report). Bank for International Settlements. 27 October 2022. p. 12. Archived (PDF) from the original on 27 October 2022.
  30. ^ "Currency Units". Editorial Style Guide (PDF). World Bank Publications. p. 134–139.
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Preceded by:
New Zealand pound
Reason: decimalisation
Ratio: 2 dollars = 1 pound 		Currency of New Zealand
10 July 1967 – 		Succeeded by:
Current
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