NZD/USD conversion calculation is an automated process of converting New Zealand dollar to United States of America dollar. NZD/USD conversion calculation is of great importance to a foreign exchange market trader who wishes to trade on these two currencies. NZD/USD conversion calculation will not only help the foreign exchange market trader dealing on these two currencies to avoid losses but will enable him or her to maximize profit. NZD stands for New Zealand dollar, and is official currency of New Zealand.
USD stands for US dollar. It is an official currency of both North and South America. The bill is the currency mostly used in foreign exchange market trading and other international transactions. Many countries use USD as their official currency. Many countries also allow this to be used in their territory in the factor capacity. The USD is generally known locally as a buck or greenback.
Due to the fact that currencies fluctuates meaning the purchasing ability of the any currency is not constant, the foreign exchange market trader that is trading on NZD and USD is always advised to run NZD/USD conversion calculation on daily basis.
In this article, factors affecting NZD/USD conversion will be considered. The following factors shall be considered:
Supply and demand
Trade and investment
Inflation and interest
SUPPLY AND DEMAND:
To carry out transaction with the US, buyers have to change their currency to USD. In the process of exchanging more other country’s currencies for the dollar bill, high demand is created for the dollar bill. They receive benefits from more than one route from selling their currency for other currencies. This exchange of currency for another currency is usually conducted in the form of bonds issued by various corporations, not only U.S government. If the demand for U.S dollar increases, the value of the dollar bill increases. Increase in the value of dollar bill will result in small amount of it being exchanged for large amount of New Zealand dollar in terms of numerical value. The reverse is the case when there is higher demand for the New Zealand dollar compared to US dollar.
TRADE AND INVESTMENT:
Analysts have marked trade and investment as the most influencing aspect of any country’s economy. Balanced trade represents the differences between the imports and exports of any country. If the total export is higher than the total export, it is called “surplus”; but it the reverse is the case, it is called “deficit”.
INFLATION AND INTEREST:
If there is higher rate of inflation in US compared to New Zealand, the value of U.S. dollar will decrease. This means that more amount of US dollar in numerical value will be used to purchase less amount of NZD; leading to more US dollar accounting for less amount of NZD in NZD/USD conversion calculation.
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.