Economics

What is the Currency of New Zealand?

The official currency of New Zealand is the New Zealand dollar.

In 1841, New Zealand officially came under British colonial rule after the London-based imperial government issued the “Charter for Erecting the Colony of New Zealand” on November 16th, 1840 which called for the withdrawal of New Zealand from the larger British colony of New South Wales. The New Zealand Pound was the official currency used in the Colony of New Zealand.

The New Zealand Pound

The New Zealand Pound was introduced in the New Zealand economy in 1840 and went by the code NZP in the foreign money markets. The New Zealand Pound was similar to the British pound as it was made up of subunits known as shillings (abbreviated as “s”) where one New Zealand Pound was equivalent to 20 shillings. The shilling was made up of 12 pence (abbreviated as “d”).

New Zealand Pound Coinage and Banknotes

The New Zealand Pound was issued in banknotes as well as in coinage. The Great Depression which hit the global economy in the 1930s had a devastating effect on New Zealand’s exports, particularly to the United Kingdom which forced financial institutions in Australia to devalue the New Zealand Pound in relation to the sterling pound. The devaluation of the currency saw the colony mint its own distinct coinage in 1933. The coinage issued by the Reserve Bank of New Zealand was struck in one, two, and two-and-a-half shillings as well as one half, one, three, and six pence denominations. The coinage was initially minted on silver coins, then later in cupro-nickel coins with one and a half pence coins being struck on bronze coins in 1940. The colony also minted commemorative coinage with the first being issued in 1935 to commemorate the Treaty of Waitangi and later in 1953 to commemorate the coronation of Queen Elizabeth II. The New Zealand Pound was also issued in banknotes with 50-, 10-, 5-, 1-pound and 10-shilling denomination banknotes being issued.

New Zealand Dollar

The New Zealand Dollar is the legal tender and official currency in New Zealand and is also known by its code, NZD. The currency is abbreviated by the sign “$” but is commonly abbreviated as “NZ$” to distinguish it from other dollar currencies of the world. The New Zealand Dollar is made up of 100 subunits known as cents (abbreviated as “c”). The New Zealand Dollar was introduced in 1967 as a replacement of the colonial New Zealand Pound as the country decimalized its currency through the passage of the “Decimal Currency Act” of 1964. The New Zealand Dollar replaced the New Zealand pound at the rate of 1 New Zealand Pound: 2 New Zealand Dollars. The currency is pegged to the US Dollar with its rate during issuance being 1 NZ$: 1.43 USD but this rate was later revised to 1 NZ$: 1.12 USD.

New Zealand Dollar Coinage and Banknotes

The issuance, inflation, and circulation of the New Zealand Dollar are regulated by the Reserve Bank of New Zealand (RBNZ). The RBNZ issues the currency in coinage and banknotes under numerous denominations with the highest being $100 banknote and the least being the 10c coin. The coinage is issued in 10c, 20c, 50c, $1, and $2 denominations while the banknotes are issued in $5, $10, $20, $50, and $100 denominations.

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