Australian dollar
$100 $2
ISO 4217 Code	AUD
User(s)	Australia 6 countries and territories  Kiribati  Nauru  Tuvalu  Christmas Island  Cocos (Keeling) Islands  Norfolk Island
Inflation	4.2% (Australia only)
Source	Reserve Bank of Australia, March 2008.
Pegged by	Tuvaluan dollar and Kiribati dollar at par
Subunit
1/100	cent
Symbol	$ 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

The 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 subdivided into 100 cents.

The Australian dollar is currently the sixth-most-traded currency in world^[1] foreign exchange markets (behind the euro, U.S. dollar, the yen, the pound sterling, and the swiss franc), 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).

History

The dollar was introduced on 14 February 1966, not only replacing the Australian pound (distinct from the pound sterling since 1929) but also introducing a decimal system.

A 20-royal note

A 10-royal note

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 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".

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 (2.5 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.

A video of the 14 FEB 1966 decimal conversion: http://nz.youtube.com/watch?v=TZVEEs-RJpw

Coins

Australian twenty-cent coin

Main article: Coins of the Australian dollar

In 1966, coins were introduced in denominations of 1, 2, 5, 10, 20 and 50 cents. 1 dollar coins were introduced in 1984, followed by 2 dollars in 1988. The 1 and 2 cent coins were discontinued in 1991 and withdrawn from circulation.^[2] Cash transactions are rounded to the nearest 5 cents or rounded down at the option of the retailer. 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. All coins portray Queen Elizabeth II on the obverse and are produced by the Royal Australian Mint.

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 and 1 dollar 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 sixpenny, 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. With a mass of 15.55 grams and a diameter of 31.51 mm, the Australian 50 cent coin is one of the largest coins still in circulation today.^clarify

Banknotes

Main article: Banknotes of the Australian dollar

First series

The first paper issues of Australian dollars were issued in 1966. The 1, 2, 10 and 20 dollars had exact equivalents in the former pound banknotes. The 5 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 1 dollar note was replaced by a coin in 1984, while the 2 dollar note was replaced by a coin in 1988. The 50 dollar note was introduced in 1973 and the 100 dollar note in 1984, in response to inflation requiring larger denominations for transactions.

Polymer series

The first polymer banknote, the 1988 Australian $10 note

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. 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.

To understand how polymer banknotes are made, see: http://nz.youtube.com/watch?v=YTggA4jVPj0

Today all Australian notes are made of polymer.

Value of the Australian dollar

The highest value of the Australian dollar since it was floated was 96.68 U.S. cents on March 14, 1984.^[3] In 2001, the value of one Australian dollar went below 50 U.S. cents for the first time, touching 47.75 U.S. cents in April 2001^[4]. On 23 April 2008, the Australian dollar reached a 24-year high against the U.S. dollar, peaking at 95.17 U.S. cents.^[5]

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 February 2008 the dollar was worth 30 milligrams of gold.^[6]

Exchange rate policies

Australia maintained a peg to the British pound at par then at 0.8 GBP(16 shillings sterling).It 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 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.

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 continued to reflect the strength of its terms of trade.

Recent history of USD versus the AUD and NZD; gray bars indicate US recessions only.

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

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

• Coins of Australia
• Note Printing Australia
• Economy of Australia

References

External links

• Australian Decimal Currency
• Reserve Bank of Australia: Notes in Circulation

• Don's World Coin Gallery - Australia
• Ron Wise's World Paper Money - Australia ^{Mirror site}
• Tables of Modern Monetary Systems by Kurt Schuler - Australia ^{Mirror site}
• The Global History of Currencies - Australia
• Global Financial Data data series - Australia Dollar (USD per AUD)
• Global Financial Data currency histories table ( Microsoft Excel format)
• 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.