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The 'Australian dollar' is the currency of the Commonwealth of Australia, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. The Australian dollar's ISO 4217 code is AUD but it is often abbreviated with the dollar sign '$'. 'A$' or 'AU$' is often used informally to distinguish it from other dollar-denominated currencies. It is divided into 100 cents.
The Australian dollar is currently the fifth-most-traded currency in world foreign exchange markets (behind the U.S. dollar, the euro, the yen, and the pound sterling), accounting for approximately 4–5% of worldwide foreign exchange transactions. The Australian dollar is popular with currency traders due to relatively high interest rates in Australia, the relative lack of government intervention in the foreign exchange market, the general stability of the economy and the government, as well as the prevailing view that it offers diversification benefits in a portfolio containing the major world currencies (especially because of its greater exposure to Asian economies and the commodities cycle).

Contents

History

The royal

Coins

Banknotes

First series

Polymer series

Value of the Australian dollar

Exchange rate policies

See also

References

External links

History

The Australian dollar was introduced on 14 February 1966, not only replacing the Australian pound (long since distinct from the pound sterling), but also introducing a decimal system.

The royal

In 1965 the Prime Minister, Robert Menzies wished to name the currency "the royal", and other names such as "the austral", "the oz", "the boomer", "the roo", "the kanga", "the emu", "the digger", "the kwid" and, jokingly, "ming" (the nickname of Menzies) were also proposed. Due to Menzies' influence, the name "royal" was settled upon, and trial designs were prepared and printed by the printing works of the Reserve Bank of Australia. The unusual choice of name for the currency proved unpopular, and it was later shelved in favour of "dollar".
On 14 February 1966 the Australian dollar was introduced at a rate of two dollars per pound, or ten shillings per dollar.
In 1967 the Australian dollar effectively left the sterling area for the first time. When sterling devalued in 1967 against the U.S. dollar, the new Australian dollar did not follow. It maintained its peg to the U.S. dollar at the same rate.

Coins

Main articles: Coins of Australia

All coins portray Queen Elizabeth II on the obverse and are produced by the Royal Australian Mint.
The one and two-cent coins were discontinued in 1990-91 and withdrawn from circulation. Cash transactions are rounded to the nearest five cents, or rounded down at the option of the retailer. In commemoration of the 40th anniversary of decimal currency, the 2006 mint Proof and Uncirculated sets include 1 and 2 cent coins. As with most public changes to currency systems, there has been a great amount of seignorage of these discontinued coins, meaning the vast majority are never going to be worth a significant amount of money.
Australia has regularly issued commemorative 50 cent coins. The first commemorative 50 cent coin was in 1970, commemorating Captain Cook's exploration along the east coast of the Australian continent, followed in 1977 by a coin for Queen Elizabeth II's Silver Jubilee, the wedding of Charles and Diana in 1981, the Brisbane Commonwealth Games in 1982, and the Australian Bicentenary in 1988. Issues expanded into greater numbers in the 1990s and the 21st century, responding to collector demand.
Australia has also made special issues of 20 cent, 50 cent and $1 coins.
There are also many Australian five dollar coins of aluminium/bronze and bi-metal as well as many silver and gold bullion coins in higher denominations. These, like the U.S coins of higher denomination than 1 dollar or which are made of precious metals, are not normally used in payment but are still legal tender.
Current Australian 5, 10 and 20 cent coins are identical in size to the former Australian, New Zealand and British sixpence, shilling and two shilling (florin) coins. In 1990 the U.K. replaced these coins with smaller versions, as did New Zealand in 2006 - at the same time discontinuing the 5 cent coin.

Banknotes

First series

The first paper issues of Australian dollars were issued in 1966. The $1, $2, $10, and $20 had exact exchange rates with the former pounds. The $5 note was issued in 1967, after the public had become familiar with decimal currency. It did not have any equivalence with the previous currency.
The $1 note was replaced by a coin in 1984, while the $2 note was replaced by a coin in 1988. The $50 note was introduced in 1973 and the $100 note in 1984, in response to inflation requiring larger denominations for transactions.

Polymer series

In 1988, the Reserve Bank of Australia issued plastic, specifically polypropylene polymer banknotes (which were produced by Note Printing Australia), to commemorate the bicentenary of European settlement in Australia. These notes contained a transparent window with an optically variable image of Captain James Cook as a security feature. Australian banknotes were the first in the world to use such features.
Today all Australian notes are made of polymer.

Value of the Australian dollar

In 2001, the value of one Australian dollar went below 50 U.S. cents for the first time. As of March 19, 2007, the Australian dollar was worth 80 U.S. cents, the second time it has reached that level since 1996. On 24 July 2007, the Australian dollar reached an 18-year high against the U.S. dollar, peaking at 88.50 US cents.^[1]
In 1966, when the Australian dollar was introduced, the International gold standard still operated. The dollar was at that time worth 980 milligrams of gold. As of December 2006 the dollar was worth 38 milligrams of gold.[1]

Exchange rate policies

Australia maintained a peg to the British pound, reflecting its historical ties as well as a view about the stability in value of the British pound. From 1946 to 1971, Australia maintained a peg to the U.S. dollar under the Bretton Woods system, but it was effectively pegged to sterling until 1967. With the breakdown of the Bretton Woods system in 1971, Australia converted the mostly-fixed peg to a moving peg against the U.S. dollar. In September 1974, Australia moved to a peg against a basket of currencies called the trade weighted index (TWI) in an effort to reduce fluctuations associated with its peg to the U.S. dollar. The peg to the TWI was changed to a moving peg in November 1976, causing the actual value of the peg to be periodically adjusted. In December 1983, the Australian Labor government led by Prime Minister Bob Hawke and Treasurer Paul Keating "floated" the Australian dollar. From that point, movements in the Australian dollar continued to reflect the strength of its terms of trade. For decades, Australia's reliance upon commodity (mineral and farm) exports has seen the Australian dollar rally during global booms, and fall when mineral prices slumped or when domestic spending overshadowed its export earnings outlook. The currency's high volatility, currency exposure and interest swap has made the AUD one of the most traded currencies in the world, far in excess of the economy's importance (2% of global economic activity).

★ Reserve Bank of Australia - daily value of AUD against 13 currencies, special drawing right and trade weighted index

★ Reserve Bank of Australia - historical data of AUD since 1969 (various .xls files)

See also

★ Coins of Australia

★ Note Printing Australia

★ Economy of Australia

References

1. Australian dollar races towards towards US90c

External links

★ Australian Decimal Currency

★ The Perth Mint is Australia's precious metals mint, making non-circulating/collector coins in silver, gold, and platinum.

★ Note Printing Australia is the printer of Australia's notes, and also inventor of the abovementioned polymer banknotes, and world exporter of this technology.

★ Current VALUE of the Australian dollar (as measured by CPI) (source is RBA)
(Note that a higher CPI figure indicates a reduction of value for the Australian dollar.)

★ The Money Tracker site allows users to track Australian banknotes as they circulate around Australia.

★ Daily Australian forecast detailed daily outlooks of the forex market.