The currency pair of the New Zealand dollar and the United States dollar is abbreviated as NZD/USD. This currency pair’s price quotation shows many US dollars are required to acquire one New Zealand dollar.
Knowing the New Zealand Dollar/US Dollar (NZD/USD)
The NZD/USD pair’s value on exness is expressed as 1 New Zealand dollar for a different number of US dollars. For instance, if the pair is selling at 1.50, that indicates that this New Zealand dollar costs 1.5 US dollars.
Agriculture is a substantial part of the New Zealand industry, accounting for more than two-thirds of all exporters. Dairy costs were another element that influenced the NZD. New Zealand exports the most whole milk powder in the world. As a result, if milk prices rise, the New Zealand economy is expected to strengthen, and currency speculators may price the currency higher in anticipation. Tourism is yet another important part of the New Zealand economy, therefore as the cost of visiting the country decreases, the economy is projected to strengthen and the currency to rise.
Despite the fact that New Zealand is one of the few nations with a fully open agriculture industry (no subsidies or tariffs), the NZD/USD pair can be traded for a variety of financial reasons which has nothing to do with the economy or what it creates. New Zealand marketplaces are the earliest to open on a large trading day, and banks and dealers may take advantage of it to place transactions ahead from the day’s events.
Factors that determine the value of the New Zealand dollar and/or the US dollar in respect to one another and other currencies have an impact on the NZD/USD. When contrasted to each other, the interest rate disparity between the Reserve Bank of New Zealand (RBNZ) and the Federal Reserve (Fed) will impact the value of these currencies. When the Fed intervenes in open market operations to boost the US currency, for example, the value of the NZD/USD cross may fall as the US currency strengthens against the New Zealand currency.
The New Zealand dollar is a share market currency because it has a very good return, thus investors will frequently purchase it and support this with a lesser earning currency like the Japanese yen or Swiss franc. These deals are for risk-takers, and they are usually closed out when the risk-takers become a threat.
This was evident during the 2008 financial crisis, when the New Zealand dollar dropped by nearly half versus the Japanese yen. Investors unwound these carry bets when volatility increased, and the NZD was one of many strong currencies that collapsed in 2008 and 2009.
The New Zealand dollar (NZD/USD) has a positive connection with its Australian counterpart (AUD/USD). The NZD/USD currency combination is known among forex traders as the “Kiwi.”
As A Commodity Pairing, The “Kiwi”
The NZD/USD, sometimes called the “Kiwi” by currency traders, is a commodities pair. The exchange rate of a product pair is usually correlated with the current performance of the underlying commodity. Usually, the commodity is produced locally in one or both economies. On the FX market, there are three key product pairings: USD/CAD, AUD/USD, and NZD/USD. Crude oil, gold, and numerous agricultural goods are the products in concern (whole milk powder).
Agricultural items, particularly dairy products, are the most important commodities linked to the NZD/USD exchange rate. New Zealand is a top-five worldwide dairy exporter, with milk powder, butter, and cheese accounting for 21.2 percent of the country’s overall exports. With a total value of US$2.2 billion, New Zealand is the fourteenth biggest supplier of agricultural commodities to the United States. 1st Commodity dollars, sometimes known as “comdolls,” have a tight relationship with the pricing of certain raw commodities. In the case of the NZD/USD, a correlation with the price of whole milk powder might have a bullish or negative influence on currency exchange values. The NZD/USD is expected to become more volatile if the market for the whole powdered milk rallies or falls.
Hence we have discussed both the pairs i.e – NZD/USD pair.