In 2016, the Australian dollar was the fifth most traded currency in world foreign exchange markets
, accounting for 6.9% of the world's daily share (down from 8.6% in 2013)
behind the United States dollar
, the euro
, the Japanese yen
and the pound sterling
. The Australian dollar is popular with currency traders, because of the 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.
As at 31 December 2016, there were US$57.71 billion equivalent in Australian currency in circulation
, $2,379.05 per person in Australia,
which includes cash reserves held by the banking system and cash in circulation in other countries or held as a foreign exchange reserve
The currency power must be read in conjunction with other parts of the Australian Constitution
. Section 115 of the Constitution provides: "A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts."
Early moves towards decimalisation
Before the adoption of the current Australian dollar in 1966, Australia's currency was the Australian pound
, which like the British pound sterling
was divided into 20 shillings and each shilling was divided into 12 pence, making a pound worth 240 pence. The Australian pound was introduced in 1910, at parity with the pound sterling. Its value diverged from the pound sterling in 1931 after the currency devaluation.
In 1937, the Banking Royal Commission[note 2]
appointed by the Lyons Government
had recommended that Australia adopt "a system of decimal coinage … based upon the division of the Australian pound into 1000 parts".
Adoption of the dollar
In February 1959, Treasurer Harold Holt
appointed a Decimal Currency Committee, chaired by Walter D. Scott
, to examine the merits of decimalisation. The committee reported in August 1960 in favour of decimalisation and recommended that a new currency be introduced in February 1963, with the adoption to be modelled on South Africa's replacement of the South African pound
with the rand
. The Menzies Government
announced its support for decimalisation in July 1961, but delayed the process in order to give further consideration to the implementation process.
In April 1963, Holt announced that a decimal currency was scheduled to be introduced in February 1966, with a base unit equal to ten shillings, and that a Decimal Currency Board would be established to oversee the transition process.
A public consultation process was held in which over 1,000 names were suggested for the new currency. In June 1963, Holt announced that the new currency would be called the "royal". This met with widespread public disapproval, and three months later it was announced that it would instead be named the "dollar".
The Australian pound was replaced by the Australian dollar on 14 February 1966
with the conversion rate of A$2 = A£1. Since Australia was still part of the fixed-exchange sterling area
, the exchange rate was fixed to the pound sterling
at a rate of A$1 = 8 U.K. shillings (A$2.50 = GB£1). In 1967, Australia effectively left the sterling area, when the pound sterling was devalued against the US dollar and the Australian dollar did not follow. It maintained its peg to the US dollar at the rate of A$1 = US$1.12.
In 1966, coins were introduced in denominations of 1, 2, 5, 10, 20 and 50 cents. The initial 50-cent coins contained 80% silver and were withdrawn after a year when the intrinsic value of the silver content was found to considerably exceed the face value of the coins. One-dollar coins were introduced in 1984, followed by two-dollar coins in 1988 to replace the banknotes of that value, while 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
sets included one- and two-cent coins. In early 2013, Australia's first triangular coin was introduced to mark the 25th anniversary of the opening of Parliament House. The silver $5 coin is 99.9% silver, and depicts Parliament House as viewed from one of its courtyards.
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 reigning Australian Sovereign, 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, one-dollar and two-dollar coins.
Current Australian 5-, 10- and 20-cent coins are identical in size to the former Australian, New Zealand, and British sixpence, shilling, and two shilling (florin) coins. Pre-decimal Australian coins remain legal tender for their cent equivalents. In 1990 and 1993, 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 (0.549 oz) and a diameter of 31.51 millimetres (11⁄4 in), the Australian 50-cent coin is one of the largest coins used in the world today. In circulation, the old New Zealand 5-, 10- and 20-cent coins were often mistaken for Australian coins of the same value, owing to their identical size and shape. Until the size of the New Zealand coins was changed in 2004, Australian coins below the dollar in value were in circulation in both countries. Still, some confusion occurs with the larger-denomination coins in the two countries; Australia's $1 coin is similar in size to New Zealand's $2 coin, and the New Zealand $1 coin is similar in size to Australia's $2 coin. As a result, Australian coins are occasionally found in New Zealand and vice versa.
The first paper issues of the Australian dollar were issued in 1966. The $1, $2, $10 and $20 notes had exact equivalents in the former pound notes. The $5 note was issued in 1967, the $50 was issued in 1973 and the $100 was issued in 1984.
First polymer series
Second polymer series
On 27 September 2012, the Reserve Bank of Australia
stated that it had ordered work on a project to upgrade the current banknotes. The upgraded banknotes would incorporate a number of new future proof security features
and include Braille dots for ease of use of the visually impaired. The first new banknotes (of the $5 denomination) were issued from 1 September 2016, and the other denominations were issued in the following years.
A new series of notes are in the process of being introduced, starting with the $5 notes which were introduced on 1 September 2016.
A new $10 note was released into circulation on 20 September 2017,
and a new $50 note was released on 18 October 2018.
The new $20 note was released into circulation on 9 October 2019, and the new $100 note was released on 29 October 2020.
Most traded currencies by value
Currency distribution of global foreign exchange market turnover
The cost of one Euro in Australian Dollar.
In 1966, when the 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.
The highest valuation of the Australian dollar relative to the U.S. dollar was during the period of the peg to the U.S. dollar. On 9 September 1973, the peg was adjusted to US$1.4875, the fluctuation limits being changed to US$1.485–US$1.490;
on both 7 December 1973 and 10 December 1973, the noon buying rate in New York City for cable transfers payable in foreign currencies reached its highest point of 1.4885 U.S. dollars to one dollar.
On 12 December 1983, the dollar was floated, allowing its value to fluctuate dependent on supply and demand on international money markets. The decision was made on 8 December 1983 and announced on 9 December 1983.
In the two decades that followed, its highest value relative to the US dollar was $0.881 in December 1988. The lowest ever value of the dollar after it was floated was 47.75 US cents in April 2001.
It returned to above 96 US cents in June 2008,
and reached 98.49 later that year. Although the value of the dollar fell significantly from this high towards the end of 2008, it gradually recovered in 2009 to 94 US cents.
On 15 October 2010, the dollar reached parity with the US dollar for the first time since becoming a freely traded currency, trading above US$1 for a few seconds.
The currency then traded above parity for a sustained period of several days in November, and fluctuated around that mark into 2011.
On 27 July 2011, the dollar hit a record high since floating. It traded at a $1.1080 against the US dollar.
Some commentators speculated that the value of the dollar in 2011 was related to Europe's sovereign debt crisis, and Australia's strong ties with material importers in Asia and in particular China
Economists posit that commodity prices are the dominant driver of the Australian dollar, and this means 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 Australian dollar varies significantly during the business cycle, rallying during global booms as Australia exports raw materials, and falling during recessions as mineral prices slump or when domestic spending overshadows the export earnings outlook. This movement is in the opposite direction to other reserve currencies, which tend to be stronger during market slumps as traders move value from falling stocks into cash.
Exchange rate policies
news report on the first day of trading with a floating Dollar.
Prior to 1983, Australia maintained a fixed exchange rate
. The first peg was 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 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 valued 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 daily TWI valuation was changed in November 1976 to a periodically adjusted valuation.
Australian notes are legal tender
throughout Australia by virtue of the Reserve Bank Act 1959
without an amount limit. The Currency Act 1965
similarly provides that Australian coins intended for general circulation are also legal tender, but only for the following amounts:
- 5¢, 10¢, 20¢, and 50¢ (of any combination): for payments not exceeding $5
- 1¢ and 2¢ coins (which have been withdrawn from circulation): for payments not exceeding 20¢
- $1 and $2 coins: for payments not exceeding 10 times the face value of a coin of the denomination concerned
- Non-circulating $10 coins: for payments not exceeding $1000000
- Coins of other denominations: no lower limit
Although the Reserve Bank Act 1959
and the Currency Act 1965
establishes that Australian banknotes and coins have legal tender status, Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender is not unlawful. It appears that a provider of goods or services is at liberty to set the commercial terms upon which payment will take place before the "contract" for supply of the goods or services is entered into. If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment. This is the case even when an existing debt is involved. However, refusal to accept legal tender in payment of an existing debt, where no other means of payment/settlement has been specified in advance, conceivably could have consequences in legal proceedings.
Design and denominations
Australia was the first country in the world to have a complete system of banknotes made from plastic (polymer). These notes provide much greater security against counterfeiting. The polymer notes are cleaner than paper notes, are more durable and easily recyclable.
Australia's currency comprises coins of 5, 10, 20 and 50-cent and one and two-dollar denominations; and notes of 5, 10, 20, 50 and 100-dollar denominations.
The revolutionary polymer notes were first introduced in 1988 with the issue of a commemorative $10 note,
marking Australia's bicentenary by featuring the theme of settlement. The note depicted on one side a young male Aboriginal person in body paint, with other elements of Aboriginal culture. On the reverse side was the ship Supply from the First Fleet, with a background of Sydney Cove, as well as a group of people to illustrate the diverse backgrounds from which Australia has evolved over 200 years.
- The $100 note features world-renowned soprano Dame Nellie Melba (1861–1931), and the distinguished soldier, engineer and administrator General Sir John Monash (1865–1931).
- The $50 note features Aboriginal writer and inventor David Unaipon (1872–1967), and Australia's first female parliamentarian, Edith Cowan (1861–1932).
- The $20 note features the founder of the world's first aerial medical service (the Royal Flying Doctor Service of Australia), the Reverend John Flynn (1880–1951), and Mary Reibey (1777–1855), who arrived in Australia as a convict in 1792 and went on to become a successful shipping magnate and philanthropist.
- The $10 note features the poets AB "Banjo" Paterson (1864–1941) and Dame Mary Gilmore (1865–1962). This note incorporates micro-printed excerpts of Paterson's and Gilmore's work. On 17 February 2017, the Reserve Bank revealed the design of the new $10 banknote.
- The $5 note features Her Majesty Queen Elizabeth II and Parliament House, Canberra, the national capital. (A special centenary issue of the $5 note featured Sir Henry Parkes and Catherine Helen Spence in 2001.) In 2015–2016 there was a petition to feature Fred Hollows on a new $5 note, the outcome of this campaign is yet to be announced. On 11 February 2016 it was announced that on 1 September 2016 a new $5 banknote would be released featuring a depiction of native Australian wattle and bird. On 12 April, the design of the new $5 banknote was released.
Polymer note technology was developed by Australia, and Australia prints polymer banknotes for a number of other countries. In 1988, Australia introduced its first polymer bank note and in 1996, Australia became the first country in the world to have a complete series of polymer notes. Australia's notes are printed by Note Printing Australia
, a wholly owned subsidiary of the Reserve Bank of Australia. Note Printing Australia prints polymer notes or simply supplies the polymer substrate
for a growing number of other countries including Bangladesh
, New Zealand
, Papua New Guinea
, Solomon Islands
, Sri Lanka
. Many other countries are showing a strong interest in the new technology.
All Australian coins depict Queen Elizabeth II on the obverse, with different images on the reverse of each coin.
- The $2 coin, which replaced the paper two dollar note in 1988, depicts an Aboriginal tribal elder set against a background of the Southern Cross and native grasstrees. (Designed by Horst Hahne)
- The $1 coin, which replaced the paper $1 note in 1984, depicts five kangaroos. (Designed by Stuart Devlin)
- The 50c coin carries the coat of arms of Australia: the six state badges on a central shield supported by a kangaroo and an emu, with a background of golden wattle, Australia's floral emblem (Designed by Stuart Devlin)
- The 20c coin carries a platypus, one of only two egg-laying mammals in the world. It has webbed feet and a duck-like bill that it uses to hunt for food along the bottom of streams and rivers. (Designed by Stuart Devlin)
- The 10c coin features a male lyrebird dancing. A clever mimic, the lyrebird inhabits the dense, damp forests of Australia's eastern coast. (Designed by Stuart Devlin)
- The 5c coin depicts an echidna, or spiny anteater, one of only two egg-laying mammal, the Platypus being the other. (Designed by Stuart Devlin)
- The 2c coin (withdrawn from circulation since 1992) depicted a frilled-neck lizard. (Designed by Stuart Devlin)
- The 1c coin (withdrawn from circulation since 1992) depicted a feather tailed glider (Designed by Stuart Devlin)
The 5c, 10c, 20c, and 50c coins are made of cupronickel
(75 percent copper and 25 percent nickel). The one and two dollar coins are made of aluminium bronze (92 percent copper, 6 per cent aluminium and 2 per cent nickel). The two dollar, one dollar, 50 and 20 cent circulating coins occasionally feature commemorative designs.
Australia's coins are produced by the Royal Australian Mint, which is located in the nation's capital, Canberra. Since opening in 1965, the Mint has produced more than 14 billion circulating coins, and has the capacity to produce more than two million coins per day, or more than 600 million coins per year. The Royal Australian Mint has an international reputation for producing quality numismatic coins, and won an international award for 'Best Silver Coin 2006' for its Silver Kangaroo coin design.
Australian currency tactile feature
In early 2015 the Reserve Bank of Australia announced that a tactile feature would be added to all new notes.
The tactile feature is an embossed feature to assist the vision-impaired
in identifying the denomination. A similar feature is used on the Canadian currency
Current exchange rates
Other main currencies
- ^ Alongside Zimbabwean dollar (suspended indefinitely from 12 April 2009), Pound sterling, Euro, US Dollar, South African rand, Botswana pula, Indian rupee, Chinese yuan, and Japanese yen. The U.S. Dollar has been adopted as the official currency for all government transactions.
- ^ In full, the "Royal Commission appointed to inquire into the monetary and banking systems at present in operation in Australia"
- ^ The total sum is 200% because each currency trade always involves a currency pair; one currency is sold (e.g. US$) and another bought (€). Therefore each trade is counted twice, once under the sold currency ($) and once under the bought currency (€). The percentages above are the percent of trades involving that currency regardless of whether it is bought or sold, e.g. the U.S. Dollar is bought or sold in 88% of all trades, whereas the Euro is bought or sold 32% of the time.
- ^ 
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Last edited on 4 May 2021, at 21:49
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