The people of New Zealand are largely agriculturalists farmers and sheeps outnumber humans at 13 to 1 odds. Much of the immigration community comes from Europe or the Netherlands. Like the Australian, the New Zealanders were using a pound along with shillings and the pence for trading purposes until the mid 1960's. Like the Australians they followed a financial system pegged close to the Great Britain Sterling pound until the Bretton Woods Agreement of 1944 came into effect and opened a new gold standard where the US dollar was the reserve currency of the world.
The British influence began in 1840 with the arrival of Naval Commander William Hobson who brought with him British coinage of gold, silver, and bronze. Hobson settled new colonies in the Polynesian Pacific and they became legal tender by 1858. When coins became scarce money printers attempted to print paper notes but met little success. Copper coins or tokens seemed to fair better as a currency and were implemented. These were minted not only by the Brits but also by locals. This practice was outlawed by the turn of the century and only British coins could be considered legal tender. They were traded with mostly Australian precious metal coinage.
By 1914 minted gold was being removed from circulation and silver coins were being minted with less purity.
In 1933 when Roosevelt is signing the Emergency Bank Act in the US the financiers in New Zealand are considering adopting a system of decimalization.
By 1935 New Zealand was administering its own currency coins which remained in the form of pounds. They were the last commonwealth to become self governing.
In 1947 nickel based coins replaced silver based coins.
By 1963 the decimalization of currency coins was finally approved and the decimal currency act of 1964 set the rules by which these coins would be minted and distributed.
In 1967 the New Zealand paper dollar as we know it today under the nickname of kiwi was introduced. The NZD or NZ$ was first pegged to the US dollar at a value of USDNZD = 1.39:1. Within a year the rate was devalued and reset at 1.12 to 1.
Other revaluation set the peg at different levels until 1985 when the New Zealand dollar was allowed to float openly on the foreign exchange markets where it became subject to the sentiments of buyers and sellers of currency. The initial offering of the floating NZD was 0.4444 US dollars.
Whether or not the New Zealand dollar can be considered a major currency is debatable. It is the 12th most liquid currency globally.
The Central Bank of New Zealand saw a problem with what they perceived to be an overly strong NZD in 2007 when it was trading at over 0.80 US and intervened by printing large volumes in order to drive down the value of the NZ$. However in the few years since the NZD value has almost fully recovered. The paper dollar along with the decimalization coins introduced in 1967 are how trades and financial transactions are completed in New Zealand.
Owning New Zealand dollars is still very risky since they are such a small nation with little influence on the global economy. This is why we ask if they are truly a major currency.
The intent of this blog is to show how major currency parity across the board could present an opportunity to return to a gold standard and another scenario similar to that discussed in Great Gold Robbery. Is the New Zealand dollar part of this hypothesis. We will know eventually.
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