An analyst said that the Australian dollar would definitely outperform the New Zealand currency
unless the RBA announced a rate cut next month.
While the firm would make gains from hedging while the New Zealand currency
was appreciating it would make losses while the New Zealand currency
* New Zealand adopted decimalised currency in July 1967 Prior to this, New Zealand currency
was made up of pounds, shillings and pence.
The use of the term "pounds sterling" indicates that the currency was not a distinctive New Zealand currency but was the currency of England authorised for circulation in New Zealand.
Decimal currency was first considered in 1933 when a committee of government officials was appointed to investigate whether, in view of the creation of a distinctive New Zealand currency at the time, it was opportune to decimalise the new currency.
(19.) G R Hawke The Evolution of New Zealand Currency (Victoria University of Wellington) 1984, p9.
New Zealand holds foreign exchange reserves primarily to enable the Reserve Bank to intervene in the New Zealand currency market if serious liquidity problems were to develop.
Since the New Zealand currency was floated in 1985, we have not intervened in the foreign exchange market despite having maintained the capacity to do so.
Other information pertinent to this topic includes sm all business surveys reported on by Grimes et al (2000), which suggest that a separate New Zealand currency
may be an obstacle to cross-border business expansion.
However, we monitor developments in currency security features in other countries and will continue to assess, on an ongoing basis, whether further security enhancements to New Zealand currency
should be made.
Perhaps, for example, there is a sizeable probability that the New Zealand currency
will remain at its current levels or even depreciate.