The Australian dollar (AUD) is the official currency of Australia, which is the world’s sixth-largest country by land area. The currency is also used by three independent Pacific Island states, namely Kiribati, Tuvalu, and Nauru, along with the Australian territories of Christmas Island, Cocos Islands, and Norfolk Island.
The AUD is abbreviated with the symbol $, which is similar to the dollar sign used for the US dollar, but with two vertical lines instead of one. The Australian dollar is also sometimes referred to as the Aussie dollar, and its ISO code is AUD.
History of the AUD
The AUD replaced the Australian pound as the official currency in 1966. The Australian pound was used in Australia from 1910 to 1966, but it was pegged to the British pound, which made it vulnerable to fluctuations in the British economy.
To create a more stable currency, the Australian government decided to introduce the AUD and peg it to the US dollar instead. The value of the AUD was set at $1.12 USD, which was equivalent to the value of the Australian pound at the time.
However, in 1971, the US dollar abandoned the gold standard, and the AUD was floated on the foreign exchange market. Since then, the value of the AUD has fluctuated depending on market forces, such as supply and demand, inflation, and interest rates.
Features of the AUD
The AUD is a decimal currency, which means it is divided into 100 smaller units called cents. The coins in circulation are 5, 10, 20, and 50 cents, along with $1 and $2 coins. The banknotes in circulation are $5, $10, $20, $50, and $100.
The Reserve Bank of Australia (RBA) is responsible for issuing and regulating the AUD. The RBA is Australia’s central bank, and its main objective is to maintain price stability and promote sustainable economic growth.
The value of the AUD is influenced by several factors, such as:
- Interest rates: Higher interest rates can attract foreign investors to invest in Australia, which can increase demand for the AUD.
- Commodity prices: Australia is a major exporter of commodities such as iron ore, coal, and natural gas. Higher commodity prices can increase demand for the AUD.
- Economic performance: Strong economic growth can increase demand for the AUD, while a weak economy can decrease demand for the AUD.
- Global events: Global events such as wars, natural disasters, and political instability can affect the value of the AUD.
Conclusion
The AUD is the official currency of Australia and is also used by three Pacific Island states and several Australian territories. It replaced the Australian pound in 1966 and is a decimal currency divided into 100 cents. The value of the AUD is influenced by various factors such as interest rates, commodity prices, economic performance, and global events. The Reserve Bank of Australia is responsible for issuing and regulating the AUD and aims to maintain price stability and promote sustainable economic growth.
