Devaluation

8 March 1983 The New Zealand Dollar was devalued by 6% against its weighted basket of currencies.
The middle rate in terms of the U.S. Dollar was consequently changed to US$0.655=$NZ1,
representing a depreciation of 8.3% from the middle rate of the previous day.
8 August 1983 The Reserve Bank practice of fixing daily exchange rates for the New Zealand Dollar
against the U.S. Dollar was abandoned, allowing the unit to follow international currency movements.
1984 At the end of 1984, almost all foreign exchange controls were in the process of removal.
31 December 1984 The buying and selling rates for the U.S. Dollar were US$0.4723 and US$0.4823,
respectively, per $NZ1.
4 March 1985 The practice of establishing a fixed exchange rate with respect to a trade-weighted
basket of currencies was terminated.
The exchange rate for the New Zealand Dollar was to be determined on the basis of supply and demand
in the foreign exchange market.
The Reserve Bank ceased to quote official buying and selling rates for the New Zealand Dollar, but
would enter the market in periods of disturbed conditions.
31 December 1985The buying and selling rates for the U.S. Dollar were US$0.499 and US$0.5,
respectively, per $NZ1.
1986 The $NZ25 tax on foreign travel tickets was abolished.
The Effective Rate was eliminated and replaced by the Interbank Rate which was to be determined by
supply and demand conditions in the exchange market. The Reserve Bank retained discretionary power
to intervene in the market.
31 December 1986 The buying and selling rates for the U.S. Dollar were US$0.5250 and
US$0.5240, respectively, per $NZ1.
31 December 1987 The buying and selling rates for the U.S. Dollar were US$0.6595 and
US$0.6585, respectively, per $NZ1.
1989 During 1989, a number of exchange control regulations were abolished.
So to review
The currency of New Zealand is the New Zealand Dollar. In 1971, the Effective Rate was created and
the currency's link to Pound Sterling was replaced with a pegging to the U.S. Dollar. In 1973, the New
Zealand Dollar was placed on a controlled, floating basis. Exchange rate is computed from the value of
the New Zealand Dollar, which is determined on the basis of the fixed relationship between the New
Zealand Dollar and a basket of currencies representing New Zealand's main trading partners. The
weights of the currencies included in the basket are established in accordance with their proportionate
share of New Zealand's total current overseas receipts and payments; the weights are adjusted
quarterly. From 1979, a crawling-peg system of monthly depreciation adopted.
In March 1985, the New Zealand dollar was floated as part of a broad-based deregulation of financial
markets. The rate was determined by the supply and demand in foreign exchange market. The Reserve
Bank has not intervened in the foreign exchange market since the float. In mid-October 1993, the New
Zealand dollar was worth less on a trade-weighted basis than at the time of the float. In early
November, the New Zealand Dollar was trading at 65 U.S. cents (buying rate: US$0.6515 and selling
rate: US$0.6520), having appreciated 6% against the U.S. Dollar in the previous 12 months.
This brings us to the mid eighties ,during the 1970s and early 1980s, New Zealand was faced with a