Exchange Rate Between New Zealand Dollar And Us Dollar
Exchange rate is the value of one currency in relation to another currency. It is affected by various economic and political factors that drive the demand and supply of a currency. In this article, we will discuss the exchange rate between the New Zealand dollar and the US dollar and the factors that affect it.
Overview of the New Zealand Dollar and US Dollar
The New Zealand dollar is the official currency of New Zealand, a country situated in the southwestern Pacific Ocean. It is abbreviated as NZD or NZ$ and is sub-divided into 100 cents. The US dollar, on the other hand, is the official currency of the United States of America and is abbreviated as USD or US$. It is the most widely used currency in international transactions and is also the world's primary reserve currency.
Exchange Rate Between New Zealand Dollar and US Dollar
The exchange rate between the New Zealand dollar and the US dollar represents the value of one currency in terms of the other. It fluctuates on a daily basis due to various economic and political factors that affect the demand and supply of each currency. As of August 2021, the exchange rate between the New Zealand dollar and the US dollar is approximately NZD 1 = USD 0.70.
Factors Affecting the Exchange Rate Between New Zealand Dollar and US Dollar
The exchange rate between the New Zealand dollar and the US dollar is affected by various economic and political factors, some of which are:
- Interest rates: The interest rates set by the central banks of each country affect the exchange rate. Higher interest rates attract foreign investors, which increases the demand for a currency and, in turn, increases its value.
- Inflation: Inflation is the rate at which the general level of prices for goods and services is rising. Higher inflation rates decrease the value of a currency as it reduces the purchasing power of consumers.
- Economic growth: The economic growth of a country affects the exchange rate. A country with a strong economy and high GDP growth rate attracts foreign investment, which increases the demand for its currency.
- Political stability: Political instability and uncertainty affect the exchange rate as it creates a negative perception among foreign investors, which reduces the demand for a currency.
- Trade balance: The trade balance between two countries affects their exchange rate. A country with a trade surplus (exports greater than imports) will have a higher demand for its currency, which will increase its value.
Impact of Exchange Rate Between New Zealand Dollar and US Dollar
The exchange rate between the New Zealand dollar and the US dollar has a significant impact on the economy and businesses of both countries. Some of the impacts are:
- International trade: A strong New Zealand dollar makes imports cheaper and exports more expensive, which can negatively impact the country's export-oriented industries. On the other hand, a strong US dollar makes imports more expensive and exports cheaper, which can benefit the US export-oriented industries.
- Tourism: A weaker New Zealand dollar can attract more tourists to the country as it makes the cost of traveling cheaper for foreign visitors. Conversely, a stronger US dollar may discourage foreign tourists from visiting the US due to higher travel costs.
- Investments: The exchange rate affects the returns on foreign investments. A weaker New Zealand dollar can increase the returns on foreign investments in the country, while a stronger US dollar can decrease the returns on foreign investments in the US.
Conclusion
The exchange rate between the New Zealand dollar and the US dollar is a crucial factor that affects the economy and businesses of both countries. It is influenced by various economic and political factors that drive the demand and supply of each currency. Understanding the exchange rate and its impacts can help individuals and businesses make informed decisions regarding investments, international trade, and tourism.