The New Zealand dollar is the official currency of New Zealand and several nearby island-nations, including Niue, Tokelau, Cook Islands and the Pitcairn Islands. The New Zealand dollar is often referred to as the kiwi because of the prevalence of the fruit in the country, because it is the nickname of New Zealanders and because the kiwi is depicted on the one-dollar coin.
The New Zealand dollar is the descendant of the New Zealand pound, which started as a pound sterling but was made distinct in 1933. Although plans had been debated to convert to a decimal currency system for over two decades, it was not until 1957 when the government began investigating the impact of such a system. Seven years later, the Decimal Currency Act was enacted, and in 1967, the New Zealand dollar was introduced. The introductory rate was two NZD to one NZ pound. The introduction included the minting of 165 million coins and 27 million banknotes.
On the world market, the NZD was first pegged to the U.S. dollar at a rate of NZ$1 to US$1.39, but was changed to NZ$1 to US$1.12 later the same year. The peg changed yet again in 1971 when the United States abandoned the gold standard and the NZD was allowed a 4.5 percent fluctuation range. When the New Zealand dollar was floated on the market in 1985, it had a rate of only NZ$1 to US$0.4444. The New Zealand dollar has floated since 1985, and the value of the NZD has ranged from US$0.39 in 2000 to US$0.83 in 2011. The New Zealand reserve bank has done little to manipulate the value of the NZD since it was floated in 1985. The only instance of record was in 2007 when the Reserve Bank sold New Zealand dollars to lower the value of the currency.
New Zealand currently circulates five different coins of the following denominations: 10 cents, 20 cents, 50 cents, $1 and $2. Banknotes were introduced in 1967 in six denominations: $1, $2, $5, $10, $20 and $100. The current banknote denominations available are the $5, $10, $20, $50 and $100 notes.
The value of the New Zealand dollar is acutely affected by the Australian dollar and both have historically been affected by the U.S. dollar. Both currencies were on a moving peg system against the U.S. dollar, but since the 1990s, the U.S. dollar has had a diminished effect on NZD and AUD currencies.