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Australian dollar
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The Australian dollar (sign: $; code: AUD) is the currency of the Commonwealth of Australia, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. Within Australia it is almost always abbreviated with the dollar sign ($); A$ or AU$ are often used informally to distinguish it from other dollar-denominated currencies. It is subdivided into 100 cents.
The Australian dollar is currently the sixth-most-traded currency in the world foreign exchange markets (behind the euro, US dollar, the yen, the pound sterling, and the swiss franc), accounting for over 6% of worldwide foreign-exchange transactions.
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The Australian dollar (sign: $; code: AUD) is the currency of the Commonwealth of Australia, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. Within Australia it is almost always abbreviated with the dollar sign ($); A$ or AU$ are often used informally to distinguish it from other dollar-denominated currencies. It is subdivided into 100 cents.
The Australian dollar is currently the sixth-most-traded currency in the world foreign exchange markets (behind the euro, US dollar, the yen, the pound sterling, and the swiss franc), accounting for over 6% of worldwide foreign-exchange transactions. The Australian dollar is popular with currency traders due to high interest rates in Australia, the relative freedom of the foreign exchange market from governmental 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
The dollar was introduced on 14 February 1966, replacing the Australian pound (distinct from the pound sterling since 1931) with a decimal currency.
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, "the ming" (the nickname of Menzies) were also proposed. 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 favor of "dollar".
The dollar
On 14 February 1966 the dollar was introduced at a rate of two dollars per pound, or ten shillings per dollar. At its introduction, it was pegged to sterling at a rate of 1 dollar = 8 shillings (2.50 dollars = 1 pound). In 1967, Australia effectively left the sterling area for the first time. When sterling 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. 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. 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 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 and one-dollar coins.
The Obverse side portraying Queen Elizabeth II has gone through a few minor adjustments as well. The first change was when Australians converted to a decimal monitary system in 1965, the next facelift came in 1985, with a new crown and pose, and finally the most recent in 1999, showing a very well seasoned queen.
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 worldwide today. Prior to 2006 the Australian and New Zealand 5, 10 and 20 cent coins were considered interchaneable, due to their identical size and shape.
Banknotes
First series
The first paper issues of Australian dollars were issued in 1966. The one, two, ten and 20-dollar notes had exact equivalents in the former pound banknotes. The five-dollar 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 one-dollar note was replaced by a coin in 1984, while the two-dollar note was replaced by a coin in 1988. The 50-dollar note was introduced in 1973 and the 100-dollar note in 1984.
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.
Polymer series
In 1988, the Reserve Bank of Australia issued plastic, 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.
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.
To understand how polymer banknotes are made, see: http://au.youtube.com/watch?v=YTggA4jVPj0
Value of the Australian dollar
In 1966, when the Australian dollar was introduced, the International gold standard was still in operation. The dollar was at that time worth 980 mg of gold. As of February 2008 the dollar was worth 30 mg of gold.
The highest value of the Australian dollar relative to the US dollar in the first two decades after it was floated was 96.68 US cents on 18 March 1984. The Australian dollar returned to 98 US cents in July 2008, and subsequently rose to a new post-float high of 98.49 US cents on 15 July 2008. The lowest value of the Australian dollar after it was floated was 47.75 US cents in April 2001.
Exchange rate policies
Australia maintained a peg to the British pound at par then 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 to the US 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 US 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 US 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.
On 9 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 reflected the credits and debits in 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.
For decades, Australia's dependency 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).
See also
External links
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- Reserve Bank of Australia:
- The is Australia's precious metals mint, making non-circulating/collector coins in silver, gold, and platinum.
- is the printer of Australia's notes, and also inventor of the abovementioned polymer banknotes, and world exporter of this technology.
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(Note that a higher CPI figure indicates a reduction of value for the Australian dollar.)
- The site allows users to track Australian banknotes as they circulate around Australia.
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