NZDCHF is the ticker symbol for the New Zealand dollar to Swiss franc exchange rate on the Forex markets. Both the New Zealand dollar and the Swiss franc are considered major currencies, but the NZD to CHF is considered a minor pair because it does not constitute the US dollar (USD). Minor currency pairs typically feature lower liquidity and trading volumes compared to major currency pairs. They are also traded with relatively wider spreads. The NZDCHF pair also has carry trade potential since the New Zealand dollar is a high-yielding currency that is very responsive to global economic conditions, whereas the Swiss franc is a stable, low-yielding currency.
In the NZDCHF Forex rate, the NZD is the base currency, whereas the CHF is the quote/counter currency. This means that at any given time, the price of the NZDCHF represents the amount of Swiss franc it would take to exchange for one unit of the New Zealand dollar (1 NZD to CHF).
History of NZDCHF
The New Zealand dollar is the official currency of New Zealand, Cook Islands, Niue, Tokelau, and the Pitcairn Islands. The decimalized currency was introduced in 1967 to replace the New Zealand pound, which was denominated in the complex Sterling system. The New Zealand pound had been in use in the country since the 1930s, and it was divisible into 20 shillings, which were further divided into 12 pence. NZD has freely floated in the markets since the fall of the Bretton Woods System and is currently the 10th most traded currency in the world, as of May 2022. The NZD is one of the commodity dollars in the forex markets because New Zealand’s economy is heavily supported by the production and export of agricultural products. Its major trading partners are China and Australia, and the strength of their currencies has a massive impact on the NZD. Tourism is also another major sector that supports the New Zealand economy.
On its part, the Swiss franc was introduced in 1850 and remains the official currency of Switzerland, Liechtenstein, and Campione d’Italia. The ‘Swissie’ (as it is nicknamed) is considered a safe haven currency owing to Switzerland’s stable economy and political neutrality. Switzerland is known for championing favourable monetary policies and maintaining low levels of debt, which has made its economy very vibrant and open. A highlight of Switzerland’s political neutrality is that the country has never engaged in any military conflict for over 500 years, despite being in a region that has historically witnessed several instances of conflict. The CHF strengthened its safe haven credentials when it maintained a gold peg from the 1970s until 2000. In 2011, the CHF was pegged to the euro (EUR), but this peg was abandoned in 2015 in the wake of a quantitative easing program rollout by the European Central Bank. Switzerland’s economy is supported by a strong manufacturing sector (watches, pharmaceuticals, and food processing) as well as a dynamic services sector (finance, banking, tourism, and commodities trading). The country’s major trading partners are within Europe as well as USA and China. Currently, the CHF stands as the 7th most traded currency in the world.
NZDCHF Historical Price Performance
The NZDCHF pair traded at around 0.83 at the turn of the millennium. After a brief tumble, the pair started surging upwards and printed a peak above 0.91 in late 2005. There was a sharp correction, but the pair recovered again and rallied to above 0.95 by mid-2007. The Swiss franc then displayed its safe haven characteristics during the 2007/8 Great Recession and the NZDCHF pair edged to lows of below 0.58 by early 2009. It, however, recovered to highs of above 0.79 by mid-2010. After a period of sideways trading, the NZDCHF drifted to lows of circa 0.57 in early 2020 during the Great Lockdown. It has since recovered and trades at around 0.62 as of May 2022.
Major Bodies Influencing NZDCHF – NZD to CHF Trading
Here are some factors to look out for when engaging in NZD/CHF trading and carrying out NZD/CHF technical analysis:
Reserve Bank of New Zealand (RBNZ)
The RBNZ is the central bank of New Zealand. It is mandated to ensure a sound and dynamic monetary environment and financial system in New Zealand. RBNZ releases Monetary Policy Decisions seven times a year and its Monetary Policy Statements every quarter. Furthermore, the Bank publishes Financial Stability Reports twice a year. These events often have a massive influence on the value of the NZD.
Statistics New Zealand
Statistics New Zealand is New Zealand’s national statistics agency, tasked with producing and publishing important statistics about the country. NZD traders watch out for the agency’s key indicators such as Consumer Price index, Unemployment Rate, GDP, Imports & Exports, as well as Travel & Tourism data.
Swiss National Bank (SNB)
The SNB is the central bank of Switzerland and is responsible for targeting inflation as well as ensuring a healthy monetary environment. The bank releases its rates and monetary policy four times a year. But the SNB is very active in the markets and even events outside the scheduled dates have a huge influence on the CHF.
Swiss Federal Statistics Office (FSO)
As Switzerland’s national statistics office, the FSO is tasked with producing and publishing objective statistical information on the country’s economy, population, and general life. CHF traders watch out for the agency’s key indicators such as the Consumer Price Index, Unemployment Rate, and Trade Balance.
The NZD/CHF pair tends to be positively correlated with the AUDSGD, NZDUSD, NZDCAD, and AUDUSD. The pair also tends to be negatively correlated with the EURNZD, USDNOK, EURNOK, and USDCNH.