The New Zealand dollar is the name of the official currency used in New Zealand as well as a few island nations in the Pacific Ocean, such as the Cook Islands and the Pitcairn Islands.
The currency was introduced in New Zealand in 1967 when it replaced the New Zealand pound at a rate of two dollars for every pound. In 1967, New Zealand also introduced a decimal currency system.
The New Zealand dollar has many different names and nicknames. Inside the country, it is usually referred to as just the dollar and in Maori (the original New Zealand language) it’s called Tāra o Aotearoa.
When written the dollar sign ($) is preferred however in international environments NZ$ is considered standard in order to separate it from the American dollar. When trading on the foreign exchange market the New Zealand dollar is called kiwi because of the tiny bird that is associated with the country and printed on the 1 dollar coin.
One New Zealand dollar is divided into 100 cents and its official ISO-4217 code is NZD. However, the smallest denomination is 10 cent meaning it can actually only be divided into oneties.
Unlike other currencies, the New Zealand dollar hasn’t been released in several series. There have been a few updates and changes to the banknotes and coins, but in general, it is still the same currency as it was back in the 1960s.
Currently, the NZD exists in 5 different coins and 5 different bills stretching from 10 cents to 100 dollars. At the time of writing, the following denominations of the New Zealand dollar are in circulation.
All the coins have Queen Elizabeth II printed on the obverse side and classic New Zealand designs on the reverse side. Among other things you can find a kiwi bird on the one dollar coin, a picture of HMS Endeavour – the first British boat to ever explore New Zealand and Australia – on the 50 cent coin, and theformer Ngāti Whakaue chief Pukakion the 20 cent coin.
New Zealand is currently going through an update of their bills and you might be able to find a few different versions in circulation. The only New Zealand dollar bill that has Queen Elizabeth II printed on it is the 20 dollar bill. The other bills have other influential citizens printed on them. For example the famous nuclear physician Ernest Rutherford is depicted on the $100 bill and Sir Edmund Hillary a mountaineer who became the first confirmed person to ever summit Mount Everest is on the $5 bill.
History of the New Zealand Dollar
As mentioned, the NZD was first introduced in 1967 when it replaced the former New Zealand Pound (NZP). The currency was first pegged to the American dollar but is now floating freely with an ever lessening influence from the USD.
Ever since the currency was first introduced it has been printed and controlled by New Zealand’s central bank, Reserve Bank of New Zealand (RBNZ or Te Pūtea Matua in Maori).
The New Zealand Dollar Today
Today the New Zealand dollar is the official method of payment in a currency union that includes the Cook Islands, Niue, Ross Dependency, Tokelau, and the Pitcairn Islands. An interesting fact is that the Cook Islands, Niue, and the Pitcairn Islands all have their own dollar currencies that coexist with the NZD. However, they are all pegged to and based on the NZD and are not accepted as official currencies anywhere else in the world.
The New Zealand dollar is a small but fairly strong currency on the forex market and it obviously has a close relationship with the neighboring Australian dollar.
Trade the New Zealand Dollar
Even though the NZD is considered a small currency, and definitely one of the smaller dollar-currencies in the world, it is very popular as a trading instrument especially in comparison to the country’s small population. In fact, for a long time period, it has ended up in the top 10 list of the world’s most traded currencies and usually represents around 2% – 2.2% of the annual global market share.
In 2016, NZD was the 10th most traded currency in the world representing 2.1% of the total market. That means it squeezed in between the Mexican peso (11th place with 1.9%) and the Swedish krona (9th place with 2.2%).
The most popular currency to trade are the NZD/USD, which comes as no surprise since the USD is the single most traded currency and also because the two currencies have had a close relationship for the last 50 years.
Because New Zealand is still ruled under the British crown, it is also popular to trade NZD with GBP as well as EUR – the world’s second most traded currency.