The Australian Dollar: What Every Forex Trader Needs to Know

He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. Since the end of China’s large-scale purchases of Australian commodities in 2013, however, the Australian dollar’s value versus the US dollar has since plunged to $0.88 as of end-2013, and to as low as $0.57 in March 2020.

The most recent series of banknotes, recognized as the 4th series, includes a tactile feature that allows the blind person to distinguish between the notes. Australian banknotes have undergone numerous changes since 1966, with four series of banknotes produced. This impetus for the Reserve Bank of Australia to collaborate with the Commonwealth Scientific and Industrial Research Organization to develop new notes resulted in introduction of the first polymer banknote in 1988. RBA also maintains economic prosperity and welfare of the people and ensures the stability of their currency.

As a result, the Australian dollar is the dominant currency in both countries. Because Australia has a floating exchange rate, the value of the Australian Dollar is determined by the demand and supply of Australian dollars in the foreign currency market. Established in 1966, the Australian dollar (AUD) is the official currency of Australia and several countries and territories, including Christmas Island, Cocos Islands, Norfolk Island, Nauru, Tuvalu, and Kiribati.

In addition, the RBA is in charge of controlling inflation and unemployment rates in the country. It also provides services to Australian and other financial institutions in the country. The Australian dollar was the sixth-most-traded currency in 2022, behind the euro (EUR), the United States dollar (USD), the Japanese yen (JPY), the British pound (GBP), and the Chinese yuan (CNY). Australia’s central bank “decimalized” its currency in 1966, replacing Australian pounds and shillings with a much simpler decimal currency.

  1. Since 2020, the Reserve Bank has implemented a broad selection of monetary policy measures to reduce funding costs and support the economy’s credit supply.
  2. Interestingly, the Aussie dollar has only been a free-floating currency since 1983.
  3. The first polymer banknote was issued in 1988 as a $10 note[27] commemorating the bicentenary of European settlement in Australia.
  4. You can open a free account with any of the big Australian banks—such as National Australia Bank—or choose an online-only “neobank” with built-in budgeting tools.

Coin denominations of 1 and 2 cents, 5, 10, 20, and 50 cents were introduced in 1966, and the first Australian dollar paper currency was also issued. The initial 50-cent coins comprised 80 percent silver but were forced to withdraw after one year because the silver content’s valuation outweighed the coin’s face value significantly. You can view the Australian dollar exchange rate before each transaction to ensure that you’re getting the best rate. Europeans established the first colony in Australia in 1788, and they brought their own currencies with them, including the Spanish dollar and the British pound. But with wars going on in Europe, there wasn’t enough money to go around, and rum “became a de-facto currency,” according to historian Matt Murphy. In 1902, a special committee of the House of Representatives, headed by George Edwards, proposed that Australia introduce a decimal currency based on florin.

Australian notes and coins are also legal tender in the independent sovereign states of Kiribati, Nauru, and Tuvalu.[4][5][6] Nauru never had its own currency. Tuvalu and Kiribati additionally had their respective Tuvaluan and Kiribati dollars at par with the Australian dollar. However, both countries no longer produce coinage since the 1990s and have never produced their own banknotes.

Convert USD to AUD at the real exchange rate

1 and 2 cent coins were discontinued in 1991 and withdrawn from circulation in 1992; since then cash transactions have been rounded to the nearest 5 cents. The Australian dollar is the currency of the Commonwealth of Australia and its independent islands. It’s symbolised by $, but can be written using A$ or AU$ to distinguish it from other dollar-based currencies. The AUD is most commonly exchanged in global markets with the British pound, and it is a fiat currency. It’s the fifth most traded currency in the world, behind the US dollar, the euro, the Japanese yen, and the pound sterling.

However, these assets are also used to supplement domestic money market operations and to meet Australia’s IMF commitments. But there are a few countries that accept the Australian dollar as legal tender. Nauru uses the Australian dollar as its official currency, while Tuvalu and Kiribati have their own coins that are pegged to the AUD and used along with https://g-markets.net/ it. With its colorful banknotes and distinct coinage, Australian currency clearly stands out from other dollar currencies. Although it uses the same symbol as the U.S. dollar, you can identify it by the letters AUD on your favorite currency converter. Australia is one of several countries in the world that uses the dollar as its official unit of currency.

Australia’s economy is driven by commodities (both metals and grains), and reports on crop planting, weather, harvests, mine output, and metal prices all can move the Aussie dollar. Fortunately, this data is not hard to find – Australia’s Bureau of Agricultural and Resource Economics and Sciences (ABARES) shooting star forex produces regular reports that are freely available on the internet. In terms of GDP (measured in U.S. dollars), Australia is well down the list among the major currencies, with the 12th-largest economy. That said, even those relatively high rates were not enough to prevent a housing bubble in Australia.

Australia has a mixed economy, with the service sector accounting for nearly 63 percent of the total gross domestic product (GDP). Foreign Exchange Markets are influenced by several factors causing demand and supply to fluctuate. These factors have a long-term and short-term impact on the Australian Dollar’s value. Through its involvement in the EMEAP Asian Bond Fund (ABF) Initiative, the Reserve Bank has also made investments in several Asian debt markets. Following the Asian currency crisis in the late 1990s, this was established to aid in developing bond markets in the region.

AUD Australian Dollar

Fortunately, it’s easy to get a bank account and send money to and from Australia. In fact, you may find them hard to cash, and more expensive than other options. In 1966, the Australian dollar replaced the pound, with 1 Australian dollar divided into 100 cents—just like the U.S. dollar (USD) and New Zealand dollar (NZD). Australia is one of the largest exporters of iron ore and coal in the world; hence, the value of AUD depends heavily on the prices of commodities. During the 2015 energy recession, oil prices reached a ten-year low, and the prices of both iron ore and coal plunged to a recent low.

But Australian currency differs from other dollars in several ways, including its design, its history, and its exchange rate. The first was in 1970, to honour Captain Cook finding the east coast of Australia. There have been many more special coins made since the 1990s, including special 20-cent, one-dollar and two-dollar coins. This is because Australia has high interest rates and little government control on currency trading.

AUD/USD (Australian Dollar/U.S. Dollar): Definition and History

In 2019, the AUD was the fifth most exchanged currency in the world and accounted for about 7% of trade in foreign exchange transactions worldwide. The high level of trade in Australia is partially due to the country’s economic and political stability and minimal government interference in the foreign exchange industry. A new series of AUD polymer notes is being unveiled, starting with the 5 AUD notes introduced in September 2016. A new 10 AUD note was launched on September 20, 2017, and a new 50 AUD note was issued on October 18, 2018. The new 20 AUD bill was launched on October 9, 2019, while the new 100 AUD note was launched on October 29, 2020. Currently, denominations of 5, 10, 20, 50, and 100 AUD are in circulation.

The Australian dollar was adopted on February 14, 1966 and replaced the Australian pound at a conversion rate of 2 AUD per Australian pound. In 1966, coins were introduced in denominations of 1 and 2 cents (bronze); 5, 10, and 20 cents (cupronickel; 75% copper, 25% nickel); and 50 cents (silver, then cupronickel). The 50-cent coins in 80% silver were withdrawn after a year when the intrinsic value of the silver content was found to considerably exceed the face value of the coins. Aluminium bronze (92% copper, 6% aluminium, 2% nickel) 1 dollar coins were introduced in 1984, followed by aluminium bronze 2 dollar coins in 1988, to replace the banknotes of that value. In everyday Australian parlance, these coins collectively are referred to as “gold coins”.

A national currency was created in 1910 as the Australian Pound and was later changed to the Australian Dollar in 1966. The Royal Australian Mint has generated over 14 billion circulating coins since its inception in 1965. The Australian Pound was pegged to the Pound Sterling and thus used as a gold standard. The government imposed the Sterling standard in 1825, and British coins were first minted in Australia.

The Australian dollar symbol is $, however, symbols such as A$ or AU$ are also used to distinguish the Australian dollar from other dollar-denominated currencies. The Australian dollar, also known as the ‘buck’, ‘dough’ and ‘aussie’, ranks as the fifth most traded currency in the world. The AUD is managed by the Reserve Bank of Australia (RBA) is the central bank of Australia, which sets the country’s monetary policy and issues and manages the Australian money supply. The bank, entirely owned by the Australian government, was established in 1960.

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