Australian dollar

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The Australian dollar (sign: $; code: AUD) is the currency of the Commonwealth of Australia, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. Within Australia it is almost always abbreviated with the dollar sign ($), with A$ sometimes used to distinguish it from other dollar-denominated currencies.^[1][2] It is subdivided into 100 cents.

The Australian dollar is currently the fifth-most-traded currency in the world foreign exchange markets behind the US dollar, the euro, the yen and the pound sterling.^[3] 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. Australians sometimes refer to the Australian Dollar by the slang term "buck".

History

With pounds, shillings and pence to be replaced by decimal currency in the 1960s, many names for the new currency were suggested. In 1965, the Prime Minister, Robert Menzies, a monarchist, wished to name the currency the royal. Other proposed names included more exotic suggestions such as the austral, the oz, the boomer, the roo, the kanga, the emu, the digger, the kwid, the dinkum, the ming (Menzies' nickname). Owing 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 favour of the dollar.^[4]

The Australian pound, introduced in 1910 and officially distinct in value from the pound sterling since devaluation in 1931,^[5] was replaced by the dollar on 14 February 1966.^[6] The rate of conversion for the new decimal currency was two dollars per Australian pound, or ten Australian shillings per dollar. The exchange rate was pegged to the pound sterling at a rate of 1 dollar = 8 shillings (2.50 dollars = 1 pound sterling). In 1967, Australia effectively left the Sterling Area when the pound sterling was devalued against the U.S. dollar and the Australian dollar did not follow. It maintained its peg to the U.S. dollar at the 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. The initial 50 cent coins contained high silver content and were withdrawn after a year for fear that the intrinsic value of the silver content would exceed the face value of the coins. 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. In commemoration of the 40th anniversary of decimal currency, the 2006 mint proof and uncirculated sets included one- and two-cent coins. 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 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 and one-dollar coins.

The portrait of Queen Elizabeth II on the obverse side has gone through some changes. The first change was when the decimal system was introduced in 1966, the next facelift came in 1985, with a new crown and pose, and finally the most recent in 1999, showing a more age-appropriate portrait of the queen. In 2000, the Royal Australian Mint circulated a commemorative 50c coin marking the Royal Visit of Queen Elizabeth. Exceptionally, this coin bore a different portrait of the Queen to that used on other Australian coins. It was the first occasion on which an Australian coin bore a representation of the Sovereign which was not synchronous with that used in the other Commonwealth Realms. In 2001, the normal portrait was restored to 50c coins.

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 in the world today. In circulation 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.

Banknotes