NZD

The New Zealand Dollar (NZD) is the official currency of New Zealand and the tenth most traded currency in the world.

Also referred to as the Kiwi, the currency is also utilized in several Pacific islands, including Tokelau, the Cook Islands, Pitcairn islands, and Niue.

The NZD’s history is long, extending back to 1934 with the creation of the Reserve Bank of New Zealand.

While far from the most traded currency in the global forex market, the NZD has a key role nonetheless.

The NZD is considered as a carry trade currency given it is a relatively high yielding currency.

Traders typically buy the NZD and fund it with a lower yielding currency such as the Japanese yen (JPY) or the Swiss franc (CHF).

What Factors Affect the NZD?

Relative to the US dollar or British pound, the NZD can be much more volatile and dependent on external economic stress or turmoil.

Investors with risk appetite often buy the currency, while market fears and crises place negative pressure on the NZD.

There are also several factors that can specifically drive the NZD in the forex market. This includes dairy prices as New Zealand is the largest exporter of whole milk powder in the world.

A rise in milk prices can lead to spikes in the NZD. By extension, tourism numbers are also important to the NZD.

This is due to New Zealand being dependent on tourism as a sizable proportion of its economy. Growing tourism would indicate a higher NZD, and vice versa.