Eurnzd investing

EUR/NZD investing is process of exchanging euro and New Zealand dollar for other currency.EUR/NZD is almost as old as foreign exchange market trading itself. In this article, the following is going to be considered:

  • The euro

  • The New Zealand dollar

FACTORS AFFECT EUR/NZD

THE EURO

European Central Bank is the central bank in Europe that has the sole responsibility of monetary regulations in Europe.  Seventeen European Union state have adopted the euro as their legal tender. After the dollar, the euro is the second most traded currency in foreign exchange market. The euro is also major global reserve currency. Other names of the Euro are:

Yoyo (Irish English)

Leru (Spanish)

Ege (Finnish)

The European currency unit par was replaced by the Euro. The Euro was made an account currency on January 1, 1999. The Euro is used in a number of sovereign countries. Many of the countries that adopted the Euro are not even part of European Union. The following are some of the countries that adopted the euro:

Principality of Andorra

Principality of Monaco

The republic of San Marino

Azores

Balearic Islands

Europe Island

Bank notes and coins of Euro began circulation in 2002. The old coins and notes were gradually withdrawn from circulation.

NEW ZEALAND DOLLAR (NZD)

New Zealand dollar (NZD) is the currency of New Zealand.

The New Zealand dollar was introduced in 1840. The first official currency of New Zealand was the New Zealand Pound. Before 1840, British and Australian Pound circulated in New Zealand. The idea of decimalization of the New Zealand dollar was not implemented until 1967 when New Zealand dollar completely replaced the New Zealand pound. The New Zealand dollar is subdivided into one hundred (100) cent. The smallest denomination of the New Zealand dollar is ten (10) cent; although smaller denomination used to exist but because of inflation and production cost its production was ceased.

FACTORS AFFECT EUR/NZD

The following factors affect EUR/NZD:

Inflation, interest rate, inflation, political stability

- INFLATION:

Inflation is one of the major factors that affect EUR/NZD. Inflation is a condition by which large volume of money is in circulation leading to increase in price of goods and services. If an investor is dealing on EUR and there is state of inflation in Europe, the value of the euro will decrease and the value of Euro compared with other currencies might reduce. If the value of euro reduces, trader who invested in euro has high probability of losing if the value does not rise.

- INTEREST RATE:

Interest rate is the amount charged by banks usually in percentage for loan. If the interest rate of a particular country increased, the country’s currency is likely to rise because more money will accrue to the government leading to increase in Gross Domestic Product of the country. If investors deal on New Zealand dollars and the interest rate in New Zealand increases, the trader is likely to make more profit.

- POLITICAL STABILITY:

The political position of a country will in no small way determine the value of the country’s currency. If for example New Zealand have favorable political position, the New Zealand dollar is likely to increase in value.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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