Australian dollar

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The Australian dollar (currency code AUD) has been, since 1966, the currency of the Commonwealth of Australia, including the Australian Antarctic Territory, Christmas Island, Cocos (Keeling) Islands, Heard Island and McDonald Islands and Norfolk Island, as well as the independent Pacific island states of Kiribati, Nauru and Tuvalu. It is normally abbreviated with the dollar sign $, or alternatively A$ to distinguish it from other dollar-denominated currencies. It is sometimes affectionately called the "Aussie battler"; during a low period (relative to the US dollar) around 2001 and 2002 the currency was sometimes locally called the "Pacific Peso". It is divided into 100 cents.

The Australian dollar is currently the sixth-most-traded currency in world foreign exchange markets (behind the US dollar, the yen, the euro, the British pound, and the Canadian dollar) accounting for approximately 4-5% of worldwide foreign exchange transactions. The Australian dollar is popular with currency traders due to the relative lack of government intervention in the foreign exchange market, the general stability of the economy and government, and views that it offers diversification benefits in a portfolio containing the major world currencies (for example because of greater exposure to Asian economies and the commodities cycle).

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Current denominations

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Coins

Image:Oz20cent.jpg Template:Main

All coins portray Queen Elizabeth II on the obverse and are produced by the Royal Australian Mint.

The one and two-cent coins were discontinued in 1990-91 and withdrawn from circulation. Cash transactions are rounded to the nearest five cents. As commemoration of the 40th anniversary of decimal currency, the 2006 mint Proof and Uncirculated sets include 1 and 2 cent coins. As with most public changes to currency systems, there has been a great amount of seignorage of these discontinued coins, meaning the vast majority are never going to be worth a significant amount of money.

Australia has long issued commerative 50 cent coins, as a follow up to commerative Florins used prior to decimal currency. The first commemorative 50 cent coin was in 1970, commerating Captain Cook's departure from England, followed in 1977 by a coin for Queen Elizabeth II's Silver Jubilee, the wedding of Charles and Diana in 1981, Commenwealth Games in 1982 and the Australia Bicentennial in 1988. Issues expanded into greater numbers in the 1990s and 21st century, responding to collector demand.

Australia has also made special issues of 20 cent and $1 coins.

There are also many Australian five dollar coins of Aluminium/Bronze and Bi-Metal as well as many silver and gold bullion coins in higher denominations. These, like the U.S coins of higher than 1 dollar or which are made of precious metals, are not normally used in payment but are still legal tender.

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Banknotes

All Australian banknotes are made of polymer and issued by the Reserve Bank of Australia. [1] They all have a clear plastic panel on the bottom corner to help prevent counterfeiting.

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History

The Australian dollar was introduced in 1966, not only replacing the Australian pound (long since distinct from the Pound Sterling) but also introducing a decimal system. The Australian Prime Minister Robert Menzies wished to name the currency "the Royal", and other names such as "the Austral" were also proposed.

Due to Menzies' influence, the name "Royal" was settled upon, and trial designs were prepared and printed by the printing works of the Reserve Bank of Australia. The unusual choice of name for the currency proved unpopular, and it was later shelved in favour of "dollar".

On February 14 1966 the Australian Dollar was introduced at a rate of two dollars per pound, or ten shillings per dollar.

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Monetary history

In the early years after Australian Federation the British pound sterling was used as the national unit of account. Sterling circulated in conjunction with banknotes and bills of credit issued by private banks. Acceptance of Private Bank notes was not made compulsory by legal tender laws, but they were widely used and accepted. Queensland treasury notes were also in circulation and these were legal tender in Queensland.

In 1910 the federal government passed the "Australian Notes Act" which prohibited the circulation of State notes. Also passed in that year was the "Bank Notes Tax Act" which imposed a tax of 10% per annum on "all bank notes issued or re-issued by any bank in the Commonwealth after the commencement of this Act, and not redeemed". Both these acts remain on the statute books and perpetuate the prohibition of private currencies in Australia.

Also in 1910 a national currency was introduced by the Labor Government of Prime Minister Andrew Fisher. The new national currency was called the Australian pound consisting of twenty shillings each consisting of twelve pence. Monetary policy ensured that the Australian pound was fixed in value to the pound sterling. As such Australia was on the Gold Standard so long as Britain was.

In 1919, the pound sterling was removed from the gold standard. When it was returned to the gold standard in 1926 the sudden increase in its value (imposed by the nominated gold price) unleashed crushing deflationary pressures. Both the initial 1919 inflation and the subsequent 1926 deflation had far reaching economic effects throughout the remnants of the British empire, Australia and the world.

In January 1931, the Labor Government of Prime Minister James Scullin devalued the Australian pound by 25% against pound sterling as an emergency measure during the Great Depression. £1 sterling became worth £1 5s. 0d. Australian (A$2.50). While this devaluation no doubt removed some of the deflationary pressures introduced five years earlier it would still have been disruptive.

In 1948, when the United Kingdom devalued the pound sterling against the US dollar, Australian Prime Minister and Treasurer Ben Chifley followed suit so the Australian pound would not become over-valued in sterling zone countries, with which Australia did most of it external trade at the time. One Australian pound went from US$2.80 to US$2.24.

On February 14, 1966, a decimal currency, known as the Australian dollar, was introduced after years of planning. (February 2, 1963 had been initially planned as the date the new currency would be introduced, but this date passed with no fanfare as no progress on developing the new currency had been made at that time.) £1 became $2, ten shillings became $1, and one shilling became ten cents. Amounts less than a shilling were converted thus:

½d. = 1c 6½d. = 5c
1d. = 1c 7d. = 6c
1½d. = 1c 7½d. = 6c
2d. = 2c 8d. = 7c
2½d. = 2c 8½d. = 7c
3d. = 2c 9d. = 8c
3½d. = 3c 9½d. = 8c
4d. = 3c 10d. = 8c
4½d. = 4c 10½d. = 9c
5d. = 4c 11d. = 9c
5½d. = 5c 11½d. = 9c
6d. = 5c 12d. = 1 s. = 10c
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Value of the Australian dollar

In 2001, the value of one Australian dollar went below 50 US cents for the first time. As of April 2006, the Australian dollar was worth 74 US cents.

In 1966 when the Australian dollar was introduced the International Gold Standard still operated. The Australian dollar was at that time worth 980 milligrams of gold. As of March, 2006 the Australian dollar was worth 40 milligrams of gold [2].

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Exchange rate policies

For much of its history, Australia maintained a peg to the British pound reflecting 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 to the US dollar under the Bretton Woods system. With the breakdown of the Bretton Woods system in 1971 Australia replace the mostly fixed peg to a moving peg against the US dollar. In September 1974 Australia moved to a peg against a basket of currencies called the TWI (trade weighted index) in an effort to reduce fluctuations associated with its peg to the US dollar. The peg to the TWI was changed to a moving peg in November 1976 where the actual value of the peg was periodically adjusted. In December 1983, the Australian Labor government led by Prime Minister Bob Hawke and Treasurer Paul Keating "floated" the Australian dollar. From that point movements in the Australian dollar continued to reflect the strength of its terms of trade. For decades Australia's reliance upon commodity (mineral & farm) exports has seen the Australia dollar rally during global booms and fall when mineral prices slumped, or when domestic spending overshadowed its export earnings outlook. The currency's high volatility, currency exposure and interest swap has made the AUD one of the most traded currencies in the world, far in excess of the economy's importance (2% of global economic activity).

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Polymer banknotes

Image:Australian $10 note 1988.jpg In 1988, the Reserve Bank of Australia issued a plastic, specifically polypropylene polymer banknote to commemorate the country's bicentenary of European settlement. These notes contained a transparent 'window' with an optically variable image of Captain James Cook as a security feature. Australian currency was the first in the world to use such features in currency.

Despite initial difficulties the Reserve Bank saw potential in the issue of plastic banknotes and commenced preparations for an entirely new series made from polymer, commencing with the $5 note in 1992. In 1995, the design of the $5 note was updated to match the rest of the New Note Series, with additional slight changes in 1996. In 2001, a special commemorative $5 note was produced, but in 2002, the previous version's production commenced again.

In 2002, the design of all notes were slightly changed, to include the names of the people pictured on them under the portraits, and swapping the order of the signatures of officials on the notes.

Today all Australian notes are made of polymer.

All notes are the same width, but each note is longer than the previous lower-value note.

  • $5 – 65mm × 130mm
  • $10 – 65mm × 137mm
  • $20 – 65mm × 144mm
  • $50 – 65mm × 151mm
  • $100 – 65mm × 158mm
Images of banknotes
Image:Australian 5note front.jpg Image:Australian 5note back.jpg
Image:Australian 5note front (new).jpg Image:Australian 5note back (new).jpg
Image:Australian 10note front.jpg Image:Australian 10note back.jpg
Image:Australian 20note front.jpg Image:Australian 20note back.jpg
Image:Australian 50note front.jpg Image:Australian 50note back.jpg
Image:Australian 100note front.jpg Image:Australian 100note back.jpg
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Issues of currency

In the lead up to Federation, the currency used in the Australian colonies was the Pound Sterling, divided into 20 Shillings, each of which was divided into 12 Pence. English silver and copper coins circulated alongside Australian minted gold sovereigns (worth one pound) and half sovereigns, as well as locally minted copper trade tokens. Banknotes were issued by private banks as well as certain colonial governments such as that of Queensland. Paper denominations ranged from 1 to 100 Pounds.

After Federation in 1901, the Australian government assumed the power to issue currency and began superscribing the private issues that were in circulation, in preparation for the issue of a domestic currency.

In 1910 the first truly national Australian silver coinage was introduced in denominations of threepence, sixpence, one shilling, and two shillings (one florin). Copper pennies and halfpennies followed in 1911. In 1937 a five shilling piece was issued to commemorate the coronation of King George VI. This coin proved unpopular and was discontinued shortly after being reissued in 1938.

In 1913 the first national banknotes were introduced in denominations of 10 shillings, and 1, 5, and 10 Pounds. 1914 saw the introduction of 20, 50, 100, and 1000 Pound notes. The 1000 Pound note only saw limited circulation and was later confined to inter-bank use. There are no uncancelled examples of this note known in private hands.

In the mid 1920s a modified 10 shilling (worded as "Half Sovereign"), and reduced size 1, 5, and 10 Pound notes were issued with the side profile of King George V on the face. These notes still referred to the currency's convertibility to gold on demand. A newer 1000 Pound note with the profile of George V was also prepared but never issued. An unissued printer's trial of this note was discovered in London in 1996 and subsequently sold for in excess of 200,000 Australian Dollars. Nonetheless this note is not recognised as a legitimate Australian banknote issue.

During the Great Depression Australian currency ceased to be redeemable for gold at the previously maintained rate of one gold sovereign for one pound currency. Subsequently a new series of Legal Tender notes were designed, once again bearing the portrait of King George V, in denominations of 10 Shillings and 1, 5 and 10 Pounds. These denominations and designs were maintained and modified to accommodate the portrait of King George VI in 1938.

Image:L50parkes.JPG The coronation of Queen Elizabeth II in 1953 saw the issue of a new series with portrait of prominent persons in Australia's history.

A fifty pound note was also prepared with the portrait of Henry Parkes, but this note was never issued. A few specimens exist in private hands and are worth a great deal to collectors.

Another coin highly sought after by collectors is the Penny dated 1930. Its rarity is so well known amongst Australians, that demand for what is akin to a blue chip investment has pushed prices to approximately 35,000 Australian Dollars for an average standard example. A proof example of the same coin recently changed hands for over 620,000 Australian Dollars, making it the most expensive copper coin in the world.

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Former banknotes and coins in decimal currency

There have been two basic issues of decimal currency. The first paper issues of Australian dollars, issued in 1966, featured portraits of the following persons: Image:100 dollar note front.jpg Image:AUD2.jpg

Copper one cent and two cent coins were withdrawn from circulation in 1991. The one cent coin featured a Sugar Glider and the two cent coin a Frill-necked Lizard. The one and two cent coins have been released but not for legal tender in the 2006 coin sets (uncirculated and proof).

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External links

(Note that a higher CPI figure indicates a reduction of value for the Australian dollar.)

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See also

Template:AsianCurrenciesca:Dòlar australià de:Australischer Dollar es:Dólar australiano eo:Aŭstrala dolaro eu:Dolar australiarra fr:Dollar australien io:Australiana dolaro id:Dolar Australia it:Dollaro australiano he:דולר אוסטרלי nl:Australische dollar ja:オーストラリア・ドル no:Australsk dollar nn:Australsk dollar pl:Dolar australijski pt:Dólar australiano sk:Austrálsky dolár fi:Australian dollari vi:Đô la Úc zh:澳大利亚元

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