Australian dollar

Australian dollar
$100 $2
ISO 4217 Code	AUD
User(s)	Australia 7 Australian territories Ashmore and Cartier Islands Australian Antarctic Territory  Christmas Island  Cocos (Keeling) Islands Coral Sea Islands Heard Island and McDonald Islands  Norfolk Island 3 countries  Kiribati (alongside Kiribati dollar)  Nauru  Tuvalu (alongside Tuvaluan dollar)
Inflation	2.9% (Australia only)
Source	Reserve Bank of Australia, March 2010.
Pegged by	Tuvaluan dollar and Kiribati dollar at par
Subunit
1/100	cent
Symbol	$, A$ or AUD
cent	c
Coins	5c, 10c, 20c, 50c , $1, $2
Banknotes	$5, $10, $20, $50, $100
Central bank	Reserve Bank of Australia
Website	www.rba.gov.au
Printer	Note Printing Australia
Website	www.noteprinting.com
Mint	Royal Australian Mint
Website	www.ramint.gov.au

$5 Australian note

$10 Australian note

$20 Australian note

$50 Australian note

$100 Australian note

The Australian dollar (sign: $; code: AUD) is the currency of the Commonwealth of Australia, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. Within Australia it is almost always abbreviated with the dollar sign ($), with A$ sometimes used to distinguish it from other dollar-denominated currencies.^[1][2] It is subdivided into 100 cents.

The Australian dollar is currently the fifth-most-traded currency in the world foreign exchange markets behind the US dollar, the euro, the yen and the pound sterling.^[3] The Australian dollar is popular with currency traders due to comparatively high interest rates in Australia, the relative freedom of the foreign exchange market from government intervention, the general stability of Australia's economy and political system, and the prevailing view that the Australian dollar offers diversification benefits in a portfolio containing the major world currencies, especially because of its greater exposure to Asian economies and the commodities cycle.

History

With pounds, shillings and pence to be replaced by decimal currency in the 1960s, many names for the new currency were suggested. In 1965, the Prime Minister, Robert Menzies, a monarchist, wished to name the currency the royal. Other proposed names included more exotic suggestions such as the austral, the oz, the boomer, the roo, the kanga, the emu, the digger, the kwid, the dinkum, the bloody paper and the ming (Menzies' nickname). Due to Menzies' influence, the name royal was settled on, and trial designs were prepared and printed by the Reserve Bank of Australia. The choice of name for the currency proved unpopular, and it was later dropped in favour of the dollar.^[4]

The dollar was introduced on 14 February 1966, replacing the Australian pound (distinct from the pound sterling since 1931)^[5] with a decimal currency. The initial rate of conversion was two dollars per pound, or ten shillings per dollar. Its exchange rate was pegged to the sterling at a rate of 1 dollar = 8 shillings (2.50 dollars = 1 pound). In 1967, Australia effectively left the sterling era. When the sterling was devalued in 1967 against the U.S. dollar, the Australian dollar did not follow. It maintained its peg to the U.S. dollar at the same rate of 1 Australian dollar = 1.12 U.S. dollars.

Coins

In 1966, coins were introduced in denominations of 1, 2, 5, 10, 20 and 50 cents. The initial 50 cent coins contained high silver content and were withdrawn after a year for fear that the growing value of the silver content would exceed the intrinsic value of the coins. One-dollar coins were introduced in 1984, followed by two-dollar coins in 1988. The one- and two-cent coins were discontinued in 1991 and withdrawn from circulation. In commemoration of the 40th anniversary of decimal currency, the 2006 mint proof and uncirculated sets included one- and two-cent coins. Cash transactions are rounded to the nearest five cents. As with most public changes to currency systems, there has been a great amount of seignorage of the discontinued coins. All coins portray the head of state, Queen Elizabeth II, on the obverse, and are produced by the Royal Australian Mint.

Australia has regularly issued commemorative 50-cent coins. The first was in 1970, commemorating James 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, Prince of Wales and Lady Diana Spencer 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 and one-dollar coins.

The portrait of Queen Elizabeth II on the obverse side has gone through some changes. The first change was when the decimal system was introduced in 1966, the next facelift came in 1985, with a new crown and pose, and finally the most recent in 1999, showing a more age-appropriate portrait of the queen. In 2000, the Royal Australian Mint circulated a commemorative 50c coin marking the Royal Visit of Queen Elizabeth. Exceptionally, this coin bore a different portrait of the Queen to that used on other Australian coins. It was the first occasion on which an Australian coin bore a representation of the Sovereign which was not synchronous with that used in the other Commonwealth Realms. In 2001, the normal portrait was restored to 50c coins.

There are many five-dollar coins, of aluminium/bronze and bi-metal, and many silver and gold bullion coins in higher denominations. These are not normally used in payment, although they are legal tender.

Current Australian 5-, 10- and 20-cent coins are identical in size to the former Australian, New Zealand and British sixpenny, shilling and two shilling (florin) coins. In 1990, the UK replaced these coins with smaller versions, as did New Zealand in 2006 - at the same time discontinuing the five-cent coin. With a mass of 15.55 grams and a diameter of 31.51 mm, the Australian 50-cent coin is one of the largest sized coins used in the world today. In circulation New Zealand 5-, 10- and 20-cent coins were often mistaken for Australian coins of the same value, due to their identical size and shape.

Banknotes

First series

The first paper issues of Australian dollars were issued in 1966. The $1, $2, $10 & $20 notes had exact equivalents in the former pound banknotes. The $5 note was issued in 1967, after the public had become familiar with decimal currency. There had not previously been an equivalent £2 10s note.

The $50 note was introduced in 1973. The $1 note was replaced by a coin in 1984, while a $100 note was also introduced. In 1988 the $2 note was replaced by a coin.

Polymer series

The first polymer banknotes were issued in 1988 by the Reserve Bank of Australia, specifically polypropylene polymer banknotes (produced by Note Printing Australia), to commemorate the bicentenary of European settlement in Australia. All Australian notes are now made of polymer.

Notes are sized according to their denomination, for the visually impaired. They are the same height but of different lengths, in order of their value - $5 being the smallest, $100 the largest. Notes are also colour coded: $5 pink (there are two designs); $10 blue; $20 red; $50 yellow; and $100 green.

As a security feature, these notes contained a transparent window with an optically variable image of Captain James Cook. Every note also has a seven-pointed star which has only half the printing on each side as well as an image of the Australian Coat of Arms only visible when held up to the light. Australian banknotes were the first in the world to use such features.

Value of the Australian dollar

In 1966, when the Australian dollar was introduced, the international currency relationships were maintained under the Bretton Woods system, a fixed exchange rate system using a U.S. dollar standard. The Australian dollar, however, was effectively pegged to the British pound at an equivalent value of approximately 1 gram of gold.

On 8 December 1983, the Australian dollar was floated, allowing its value to fluctuate dependent on supply and demand on international money markets.^[6]

In the two decades following the floating of the Australian dollar, its highest value relative to the US dollar was 96.68 US cents on 18 March 1984.^[7] The Australian dollar returned to 96 US cents in June 2008,^[8] and subsequently rose to a new post-float high of 98.49 US cents on 15 July 2008.^[9] Although the value of the Australian dollar fell significantly from this high towards the end of 2008, it gradually recovered in 2009 to 94 US cents, finishing the year, however, below the 90 US cent mark. The lowest value of the Australian dollar after it was floated was 47.75 US cents in April 2001.^[10]

Exchange rate policies

Most traded currencies
Currency distribution of reported FX market turnover^[11]

Rank	Currency	ISO 4217 code (Symbol)	% daily share (April 2010)
1	United States dollar	USD ($)	84.9%
2	Euro	EUR (€)	39.1%
3	Japanese yen	JPY (¥)	19.0%
4	Pound sterling	GBP (£)	12.9%
5	Australian dollar	AUD ($)	7.6%
6	Swiss franc	CHF (Fr)	6.4%
7	Canadian dollar	CAD ($)	5.3%
8	Hong Kong dollar	HKD ($)	2.4%
9	Swedish krona	SEK (kr)	2.2%
10	New Zealand dollar	NZD ($)	1.6%
Other			18.6%
Total[notes 1]			200%

Australia maintained a fixed exchange rate between the Australian and British pounds, initially at par, and later at 0.8 GBP (16 shillings sterling). This reflected 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 under the Bretton Woods system, a fixed exchange rate system that pegged the U.S. dollar to gold, but the Australian dollar was effectively pegged to the sterling until 1967.

With the breakdown of the Bretton Woods system in 1971, Australia converted the traditional peg to a fluctuating rate against the US dollar. In September 1974, Australia valuated the dollar against a basket of currencies called the trade weighted index (TWI) in an effort to reduce the fluctuations associated with its tie to the US dollar. The TWI valuation was changed in November 1976 to a periodically adjusted valuation.

On 9 December 1983, the Australian Labor government led by Prime Minister Bob Hawke and Treasurer Paul Keating floated the Australian dollar, and the exchange rate of the Australian dollar reflected the balance of payments. The terms of trade does not determine the value of the dollar but it is a major component of the balance of payments.

Changes in exchange rates of the Australian dollar occur in ways opposite to many other currencies. For decades, Australia's balance of trade has depended primarily upon commodity exports such as minerals and agricultural products. This means the relative value of the dollar varies significantly during the business cycle, rallying during global booms as Australia exports raw materials, and falling when mineral prices slump or when domestic spending overshadows the export earnings outlook. This movement relative to the global economy is generally in the opposite direction to other major currencies, which are more popular during slumps as traders move value from falling stocks into cash. This high volatility and unorthodox movement in exchange rates has contributed to the AUD's status as one of the most traded currencies in the world.

• 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

Wikimedia Commons has media  related to (category): Coins of Australia  or Banknotes of Australia

• Banking in Australia
• Brass razoo
• Coins of Australia
• Economy of Australia
• Note Printing Australia

Notes

References

Notes

External links

• Sound recording of 1966 Decimal Currency radio advertisement held at the National Archives of Australia
• Australian Decimal Currency
• Reserve Bank of Australia: Current Banknotes
• 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.
• Images of historic and modern Australian bank notes

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