The NZD and how it became an exotic currency

May 12, 2020

The New Zealand Dollar (NZD) is the national currency of New Zealand, the Niue Islands, Tokelau, Pitcairn, and the Cook Islands. One New Zealand dollar is equal to 100 cents.

New Zealand dollars have a slang name – “kiwi”, as the one-dollar coins depict the kiwi bird, one of the national symbols of New Zealand.


The New Zealand dollar is a freely convertible currency, is included in the CLS, an international system for the implementation of payments on conversion operations, operating for member countries of the International Monetary Fund (IMF).

The Reserve Bank of New Zealand controls the issue of the New Zealand dollar. Banknotes are printed by a subsidiary of the Reserve Bank of Australia Note Printing Australia (NPA). Coins are minted mainly by the Royal Mint of Great Britain and the Royal Canadian Mint. In circulation are banknotes in denominations of 5, 10, 20, 50 and 100 dollars, coins in denominations of 10, 20 and 50 cents, 1 and 2 dollars. Since 1999, all banknotes in New Zealand have been made from a polymer material.

The rate of the New Zealand dollar against other currencies is set during trading on the international currency market, depending on supply and demand. This method of determining the exchange rate is called a free conversion. The member countries decided on free currency conversion of the International Monetary Fund (IMF) in the mid-seventies of the XX century as one of the fundamental principles of the Jamaican currency system. Its feature is free-floating exchange rates, the value of which is set depending on supply and demand in the foreign exchange market.

NZD in the gambling industry

The New Zealand dollar has managed itself to establish itself in the gambling industry as well, the feat which is not available for every currency. As online gambling in New Zealand develops rapidly, people deposit NZD to play . They do it mostly because the promotions are available only if the money is deposited in the local currency. People are free to use USD as well, but NZD gives access to various bonus opportunities.

History of NZD

Until 1840, New Zealand did not have a single monetary system; the currency of the metropolis – Great Britain, as well as banknotes of other countries – were circulating. Since 1897, the pound has been officially recognized as legal tender in New Zealand. Besides, six private banks were empowered to issue their notes. In 1907, New Zealand gained British dominion status, and the New Zealand Pound was introduced into circulation, the issue of which continued to be carried out by private banks.

In 1930, the Reserve Bank of New Zealand was declared the country’s central bank with exclusive authority to issue national currency. In 1934, the Reserve Bank of New Zealand issued the first series of New Zealand pound banknotes (the New Zealand Treasury controlled the minting of coins until 1989). Since 1935, British banknotes ceased circulation in New Zealand.

to the decimal monetary system; the New Zealand dollar, which was divided by 100 cents, was introduced into circulation. The exchange of old banknotes for new ones was carried out at the rate of 1: 2. The New Zealand dollar was originally pegged to the US dollar at the exchange rate: 1 NZD for $1.39 with the established gold standard. After that, the New Zealand dollar fluctuated due to the devaluation of the US dollar and the crisis in the economy.

The New Zealand authorities used various mechanisms to manage the national currency exchange rate, until in 1973 instead of moving the peg to the US dollar, they tied the New Zealand dollar rate to a basket of currencies of the main trading partners (TWI index). In 1985, the floating rate of the New Zealand dollar was introduced, which by this time had fallen against the US dollar to the level of 1:0.44.

The New Zealand dollar is one of the eight most popular currencies traded on the international Forex currency market. It is an exotic currency, and the New Zealand dollar is classified as highly profitable commodity currencies, so its movement is distinguished by a high correlation with gold and oil. Since Australia is , New Zealand’s exchange rate is influenced by the dynamics of the Australian dollar and Australia’s macroeconomic performance.

At the same time, the movement of the New Zealand dollar is highly dependent on the macroeconomic indicators of the United States, as well as the difference in base interest rates between New Zealand and the United States. It should be borne in mind that the monetary policy of the New Zealand Central Bank is directed against the excessive strengthening of the national currency to support exports.

Although the New Zealand dollar is sensitive to macroeconomic statistics of New Zealand itself, official data are disclosed relatively rarely – only quarterly and annual reports are subject to publication. This simplifies forecasting the New Zealand dollar.


Due to its high profitability, the New Zealand dollar is considered one of the most attractive currencies for playing on the difference in interest rates. In forex, it is known as an exotic currency, and plenty of people turn to it.