Australian dollar

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Australian dollar
Australian dollar  (English)
1 dollar coin
ISO 4217
Code	AUD
Number	036
Exponent	2
Denominations
Subunit
1/100	cent
Symbol	$, A$, AU$
cent	c
Banknotes	$5, $10, $20, $50, $100
Coins	5c, 10c, 20c, 50c, $1, $2
Demographics
Date of introduction	14 February 1966
Replaced	Australian pound
Official user(s)	Australia show 7 external territories Ashmore and Cartier Islands Australian Antarctic Territory  Christmas Island  Cocos (Keeling) Islands Coral Sea Islands Territory Heard Island and McDonald Islands  Norfolk Island show 3 other countries  Kiribati (alongside Kiribati dollar)  Nauru  Tuvalu (alongside Tuvaluan dollar)
Unofficial user(s)	Cambodia[citation needed]  Gambia  New Caledonia (France)  New Zealand  Papua New Guinea  Solomon Islands  Tonga  Vanuatu  Zimbabwe[note 1]
Issuance
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
Valuation
Inflation	1.3% (Australia only)
Source	Reserve Bank of Australia, September 2018.
Pegged by	Tuvaluan dollar and Kiribati dollar at par

The Australian dollar (sign: $; code: AUD) is the currency of Australia, including its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is officially used as currency by three independent Pacific Island states: Kiribati, Nauru, and Tuvalu. It is legal tender in Australia.^[2] Within Australia, it is almost always abbreviated with the dollar sign ($), with A$ or AU$ sometimes used to distinguish it from other dollar-denominated currencies.^[3][4] The $ symbol precedes the amount. It is subdivided into 100 cents.

The Australian dollar was introduced on 14 February 1966 to replace the pre-decimal Australian pound, with the conversion rate of A$2 per = A£1. The Australian dollar was legal tender of Papua New Guinea until 31 December 1975, when the Papua New Guinean kina became sole legal tender, and of the Solomon Islands until 1977, when the Solomon Islands dollar became sole legal tender.

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)^[5] 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.^[6]

As at 31 December 2016, there were US$57.71 billion equivalent in Australian currency in circulation, $2,379.05 per person in Australia,^[7] which includes cash reserves held by the banking system and cash in circulation in other countries or held as a foreign exchange reserve.

Constitutional basis[]

Section 51(xii) of the Constitution of Australia gives the Commonwealth (federal) Parliament the power to legislate with respect to "currency, coinage, and legal tender".

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."^[8]

Under this provision the Perth Mint, owned by the Western Australian government, still produces gold and silver coins with legal tender status,^{[citation needed]} the Australian Gold Nugget and Australian Silver Kookaburra. These, however, although having the status of legal tender, are almost never circulated or used in payment of debts, and are mostly considered bullion coins. Australian coins are now produced at the Royal Australian Mint in Canberra.

History[]

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.^[9]

In 1902, a select committee of the House of Representatives, chaired by George Edwards, had recommended that Australia adopt a decimal currency with the florin as its base.^[10]

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".^[11]

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.^[12] 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.^[11]

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".^[13]

The Australian pound was replaced by the Australian dollar on 14 February 1966^[14] 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.

Coins[]

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.

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). Since the discontinuation of the 1c and 2c denominations in 1992, cash transactions have been rounded to the nearest five cents.

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.

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 (1+1⁄4 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.

Commemorative coins[]

The Royal Australian Mint also has an international reputation for producing quality numismatic coins. It has first issued commemorative 50-cent coins 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. Commemorative designs have also been featured on the circulating two dollar, one dollar, and 20 cent coins.

In commemoration of the 40th anniversary of decimal currency, the 2006 mint proof and uncirculated 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.^[15]

Banknotes[]

First series[]

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.^[16]

Shortly after the changeover, substantial counterfeiting of $10 notes was detected. This provided an impetus for the Reserve Bank of Australia to develop new note technologies jointly with the Commonwealth Scientific and Industrial Research Organisation, culminating in the introduction of the first polymer banknote in 1988.

First polymer series[]

Australia was the first country in the world to have a complete system of banknotes made from plastic (polymer),^[17] more specifically polypropylene polymer banknotes (produced by Note Printing Australia). The polymer notes are cleaner than paper notes, are more durable and easily recyclable.

The revolutionary polymer banknotes were first introduced in 1988 with the issue of a commemorative $10 note,^[18] commemorating the bicentenary of European settlement in Australia. 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.

Persons featured on the first polymer series are as follows:

• 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).^[19]
• The $50 note features Aboriginal writer and inventor David Unaipon (1872–1967), and Australia's first female parliamentarian, Edith Cowan (1861–1932).^[20]
• 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.^[21]
• 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.^[22]
• 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.)^[23]

In 2015–2016 there was a petition to feature Fred Hollows on a new $5 note, but was not successful. ^{[24] [25]}

Australia also prints polymer banknotes for a number of other countries through 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^[26] for a growing number of other countries including Bangladesh, Brunei, Chile, Kuwait, Malaysia, Mexico, Nepal, New Zealand, Papua New Guinea, Romania, Samoa, Singapore, Solomon Islands, Sri Lanka and Vietnam. Many other countries are showing a strong interest in the new technology.

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 ^[27] and include tactile features like Braille dots for ease of use of the visually impaired. ^[28][29]

The first new banknote of this series was the $5 note which was introduced on 1 September 2016.^[30] The new $10 note was released into circulation on 20 September 2017,^[31] and the new $50 note was released on 18 October 2018.^[32] The new $20 note was released on 9 October 2019, and the new $100 note was released on 29 October 2020.^[33]

All persons featured on the first polymer series were retained on the second polymer series.

Exchange rates[]

Most traded currencies by value
Currency distribution of global foreign exchange market turnover^[34]

Rank	Currency	ISO 4217 code (symbol)	% of daily trades (bought or sold) (April 2019)
1	United States dollar	USD (US$)	88.3%
2	Euro	EUR (€)	32.3%
3	Japanese yen	JPY (¥)	16.8%
4	Pound sterling	GBP (£)	12.8%
5	Australian dollar	AUD (A$)	6.8%
6	Canadian dollar	CAD (C$)	5.0%
7	Swiss franc	CHF (CHF)	5.0%
8	Renminbi	CNY (元 / ¥)	4.3%
9	Hong Kong dollar	HKD (HK$)	3.5%
10	New Zealand dollar	NZD (NZ$)	2.1%
11	Swedish krona	SEK (kr)	2.0%
12	South Korean won	KRW (₩)	2.0%
13	Singapore dollar	SGD (S$)	1.8%
14	Norwegian krone	NOK (kr)	1.8%
15	Mexican peso	MXN ($)	1.7%
16	Indian rupee	INR (₹)	1.7%
17	Russian ruble	RUB (₽)	1.1%
18	South African rand	ZAR (R)	1.1%
19	Turkish lira	TRY (₺)	1.1%
20	Brazilian real	BRL (R$)	1.1%
21	New Taiwan dollar	TWD (NT$)	0.9%
22	Danish krone	DKK (kr)	0.6%
23	Polish złoty	PLN (zł)	0.6%
24	Thai baht	THB (฿)	0.5%
25	Indonesian rupiah	IDR (Rp)	0.4%
26	Hungarian forint	HUF (Ft)	0.4%
27	Czech koruna	CZK (Kč)	0.4%
28	Israeli new shekel	ILS (₪)	0.3%
29	Chilean peso	CLP (CLP$)	0.3%
30	Philippine peso	PHP (₱)	0.3%
31	UAE dirham	AED (د.إ)	0.2%
32	Colombian peso	COP (COL$)	0.2%
33	Saudi riyal	SAR (﷼)	0.2%
34	Malaysian ringgit	MYR (RM)	0.1%
35	Romanian leu	RON (L)	0.1%
Other			2.2%
Total[note 3]			200.0%

The cost of one Euro in Australian 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.^[35] The daily TWI valuation was changed in November 1976 to a periodically adjusted valuation.

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;^[36] 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.^[37]

Play media

1983 ABC news report on the first day of trading with a floating Dollar.

On December 1983, the Australian Labor government led by Prime Minister Bob Hawke and Treasurer Paul Keating floated the dollar, with the exchange rate reflecting the balance of payments as well as supply and demand on international money markets. The decision was made on 8 December 1983 and announced on 9 December 1983.^[38]

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.^[39] It returned to above 96 US cents in June 2008,^[40] 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.^[41] The currency then traded above parity for a sustained period of several days in November, and fluctuated around that mark into 2011.^[42] On 27 July 2011, the dollar hit a record high since floating. It traded at a $1.1080 against the US dollar.^[43]

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.^[44]

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.^[45] 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.

The Australian dollar is a reserve currency and one of the most traded currencies in the world.^[6] Other factors in its popularity include a relative lack of central bank intervention, and general stability of the Australian economy and government.^[46] In January 2011 at the World Economic Forum in Davos, Switzerland, Alexey Ulyukaev announced that the Central Bank of Russia would begin keeping Australian dollar reserves.^[47]

Current exchange rates[]

Legal tender[]

Australian notes are legal tender throughout Australia by virtue of the Reserve Bank Act 1959, s.36(1),^[2] without an amount limit. Part IV of the Currency Act 1965^[48] similarly provides that Australian coins intended for general circulation are also legal tender, but only for the following amounts:

• 1¢ and 2¢ coins (which have been withdrawn from circulation): for payments not exceeding 20¢
• 5¢, 10¢, 20¢, and 50¢ (of any combination): for payments not exceeding $5
• $1 coins: for payments not exceeding $10
• $2 coins: for payments not exceeding $20
• Non-circulating $10 coins: for payments not exceeding $100 ^[49]
• Coins of other denominations: no lower limit

The 1¢ and 2¢ coins were withdrawn from circulation from February 1992 but remain legal tender.^[50]

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.^[50][51]

See also[]

• Banking in Australia
• Brass razoo
• Coins of Australia
• Economy of Australia
• Note Printing Australia
• Section 51 (xii) of the Constitution of Australia

Other main currencies[]

• United States dollar
• Euro
• Japanese yen
• Pound sterling
• Canadian dollar
• Swiss franc

Notes[]

References[]

Citations[]

Sources[]

External links[]

Wikimedia Commons has media related to Coins of Australia and Banknotes of Australia.

• Sound recording of 1966 Decimal Currency radio advertisement held at the National Archives of Australia
• Reserve Bank of Australia: Current Banknotes
• 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.
• The Money Tracker site allows users to track Australian banknotes as they circulate around Australia.
• Images of historic and modern Australian bank notes
• Reserve Bank of Australia – daily value of AUD against 13 currencies, special drawing right and trade weighted index
• http://www.forexuklv.net/Major_Currency_Pairs/Chart_25.html – historical exchange rates of AUD/USD (from the year 1800 to present time).
• http://www.forexuklv.net/Major_Currency_Pairs/Chart_03.html – historical chart of AUD/USD (from the year 1800 to present time).
• The banknotes of Australia (in English and German)