New Zealand Dollar

• Country: New Zealand
• Currency: Dollar
• Alias: New Zealand dollar
• ISO 4217 CODES: NZD/554
• Symbol: NZ$

The dollar is the national currency of New Zealand, a two-island nation situated in the South Pacific. As a former British colony, New Zealand’s currency was based on the pound sterling until 1967, when the conversion to a new decimal-based currency was accomplished. The New Zealand dollar was briefly pegged to the U.S. dollar, but has since coverted to a basket-oriented peg that more realistically reflects the country’s various trading partners. The New Zealand dollar is sometimes referred to as the “Kiwi,” a reference to an indigenous bird species.

Background of the New Zealand Dollar

New Zealand’s indigenous people, the Maori, had settled the islands for more than a thousand years before the first European explorers arrived. For much of its early colonial existence, New Zealand was a part of the Australian colony of New South Wales. It became a separate British colony in 1841, and became an independent nation in 1907.

Nor surprisingly, New Zealand’s British ancestry lead to the adoption of an imperial currency system, using pounds, shilling, and pence. The value was of the New Zealand pound was pegged to the British Pound sterling. Conversion to a decimal system was first suggested in 1933, and again in 1957. A decision was finally reached in 1963 to transition to a decimal-based system, and on July 10, 1967, the conversion was finally implemented, and the New Zealand dollar was born, remaining pegged to the British Pound sterling.

At one point in the late nineteenth century, six separate banks were issuing notes of varying sizes and denominations. Beginning in 1934, New Zealand consolidated its banking system into a central bank – the Reserve Bank of New Zealand – and the first series of notes under the old imperial system was issued.

For a brief period in the early 1970s, the New Zealand dollar was pegged to the U.S. dollar, but then converted to a valuation based on a basket of currencies. Beginning in 1985, valuation was based on international financial markets, which – while still heavily influenced by the U.S. dollar – which lessened the potential for undue influence by a single currency.

Following Australia’s lead, New Zealand began producing all of its bank notes using a synthetic polymer material in 1999. The polymer notes enhance the longevity of the currency while simultaneously helping to thwart forgery.

Many New Zealand coins feature inscriptions in both of New Zealand’s official languages: English; and Maori, a Polynesian language of indigenous peoples. Interestingly, New Zealand law limits the amount of coins that can be used for making purchases of certain sizes. If you’re paying using $1 and $2 coins exclusively, the price limit is set at $100. If you’re paying in coins of smaller denominations, the price limit is set at $5. In 2006, New Zealand will be converting its coins to a plated steel design and eliminating the 5c coin.

The New Zealand dollar is divided into 100 cents. Denominations for coins are 5c, 10c, 20c, 50c, $1 and $2. Denominations for banknotes are $5, $10, $20, $50 and $100.