Story: Balance of payments

Floating the dollar

Floating the dollar

On 2 March 1985 the minister of finance, Roger Douglas, announced that New Zealand would no longer control the international value of the New Zealand dollar, but allow it to float so that the market set its value against other currencies. The hope was that floating the currency would automatically correct balance of payments crises. When the current account was in serious deficit, the value of the New Zealand dollar would decline. This would increase the price of imports and therefore should reduce demand. It would also make exports cheaper and so more desirable overseas.

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Alexander Turnbull Library, Dominion Post Collection (PAColl-7327)
Reference: EP/1985/1042/22
Photograph by John Nicholson

Permission of the Alexander Turnbull Library, National Library of New Zealand, Te Puna Mātauranga o Aotearoa, must be obtained before any re-use of this image.

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How to cite this page:

C. John McDermott and Rishab Sethi, 'Balance of payments - Correcting current account deficits', Te Ara - the Encyclopedia of New Zealand, (accessed 28 January 2022)

Story by C. John McDermott and Rishab Sethi, published 11 Mar 2010