Forex Dictionary Terms

New Zealand Dollar (NZD)

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Definition – What does New Zealand Dollar (NZD) mean?

The New Zealand dollar is the official currency of New Zealand. The New Zealand dollar, although popular in some trade, is not generally considered a major currency. However, it is quoted against all the major currencies, including U.S. dollar (USD), Japanese yen (JPY), British pound sterling (GBP), euro (EUR), Australian dollar (AUD) and Canadian dollar (CAD).

The New Zealand dollar is also referred to as the kiwi.

ForexTerms explains New Zealand Dollar (NZD)

The New Zealand dollar is a commodity currency as New Zealand’s economy is heavily geared towards agricultural production. However, the impact of commodity prices on the currency has not been historically as pronounced as other commodity currencies. This may be because trends in agricultural prices tend to be very hard to call on a day to day basis, unlike changes in the world price of gold or oil.

The kiwi also holds an important spot in the history of currency trading. The kiwi entered the forex market with a limited float, as befits a smaller economy. When currency options were being introduced to the forex market, a Bankers Trust currency trader named Andy Krieger used options to take up a short position on the New Zealand dollar that was allegedly worth more than the entire money supply of the country. The kiwi saw a sharp dip of 5% followed by fluctuations between a 3% to 5% loss. Krieger made millions for his employer and later left to join George Soros’s Quantum Fund.

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