BZD - Belize Dollar

History of the Belize Dollar BZD

The Belize Dollar has a rich history rooted in Belize’s colonial past, when the country was known as British Honduras. During the British colonial era, the economy was tied to the British pound, with various British coins introduced into circulation.

In 1825, a decree made British coins legal tender across all British colonies, setting an exchange rate of 1 dollar = 4 shillings and 4 pence between the British pound and the Spanish dollar. However, this rate was unrealistic and was never implemented.

In 1838, a revised exchange rate of 1 dollar = 4 shillings and 2 pence was introduced, further establishing the British pound in colonies like Bermuda and Jamaica, and phasing out the Spanish dollar.

The official British Honduras Dollar was introduced in 1885 to replace the inconsistent use of the British pound and Spanish dollar. Initially pegged to the British pound, this new currency laid the foundation for what would later become the Belize Dollar.

In 1931, following the UK’s abandonment of the gold standard, the British Honduras Dollar (referred to as the Honduran dollar at the time) was pegged to the US dollar. However, the British pound’s devaluation in 1949 and 1967 resulted in the Honduran dollar losing value against the US dollar.

In 1978, Belize adopted a fixed exchange rate of BZ$2 = US$1, a peg that has remained in place ever since.

Today, the Belize Dollar has adapted to the needs of its local economy while retaining its historical roots. The country’s coins and banknotes reflect Belize’s rich cultural and historical journey from a British colony to an independent nation, preserving its heritage while establishing its own identity.

Belize Dollar denominations

The Belize Dollar (BZD) is currently issued in two main forms: banknotes and coins.

Belize Dollar BZD Banknotes

Belize Dollar banknotes come in various denominations, issued by the Central Bank of Belize. The main denominations include:

• $2 

• $5

• $10

• $20

• $50

• $100

The front of each banknote features an image of Queen Elizabeth II, while the back showcases symbols of Belize's culture and history.

Belize Dollar BZD Coins

Belize Dollar coins are issued in smaller denominations for everyday transactions. The coin denominations include:

• 1 cent

• 5 cents

• 10 cents

• 25 cents

• 50 cents

• $1

The 1981 coin issue is considered Belize's first official coin set following independence. Most of these coins have been minted at the Royal Mint and continue to feature designs similar to those used during the British Honduras period.

The coins also feature Queen Elizabeth II, Belize’s first head of state, depicted facing right and wearing the heraldic Tudor Crown. Two different effigies of the Queen were used: one by Cecil Thomas for the 1-50 cent coins, and another by Raphael Maklouf for the dollar coin. The coins are minted from metals like copper-nickel, aluminum.

Exchange Rate of the Belize Dollar (BZD)

The exchange rate of the Belize Dollar (BZD) to the US Dollar (USD) is fixed at approximately 1 BZD = 0.49 USD, or 1 USD = 2.02 BZD. This fixed exchange rate simplifies currency conversion for international visitors and investors, ensuring that one US dollar can consistently be exchanged for two Belize dollars.

The peg to the US Dollar provides stability in Belize’s foreign exchange market and contributes to the broader stability of its economy. Since the US is Belize's largest trading partner, maintaining a fixed rate helps stabilize the prices of goods and services in both domestic and international markets. Additionally, this fixed exchange rate shields Belize from the currency fluctuations that often impact other nations in the region, making it a more appealing destination for investment and tourism.

Factors Influencing the Value of the Belize Dollar

The value of the Belize Dollar (BZD) is influenced by several economic and political factors such as inflation and monetary policies.

• USD Peg: Since the BZD is pegged to the USD, any fluctuations in the USD directly affect the value of the BZD.

• Foreign Exchange Reserves: The exchange rate of the BZD is highly dependent on Belize's foreign currency reserves. A decrease in reserves puts pressure on the BZD’s value, while an increase strengthens it.

• Inflation Rate: Domestic inflation impacts the real value of the BZD. Higher inflation erodes its value, and without effective inflation control, the exchange rate may come under pressure.

• Public Debt: Belize has a relatively high external debt. Rising public debt increases pressure on the national budget, making it difficult to maintain the fixed exchange rate, thus potentially lowering the value of the BZD.

• Foreign Investment and Tourism: Tourism plays a crucial role in Belize's economy. An increase in foreign investment and tourist arrivals boosts foreign currency reserves, which can strengthen the BZD.

• Monetary and Fiscal Policies: The Central Bank of Belize's policies and the government's fiscal measures directly influence the BZD’s stability.

• Tourism, agriculture and international trade: With its economy heavily tied to tourism, agriculture, and international trade, the stability and value of the Belize Dollar play a critical role in shaping the nation’s financial and economic landscape. 

While the fixed peg to the USD offers stability, it limits flexibility in adjusting to economic shifts. Effective management of inflation, public debt, and economic factors is essential to safeguarding the value of the BZD.