Ruqayyah Snyder
The Australian dollar (AUD) is the official currency of Australia and several independent countries and territories in the South Pacific, including Christmas Island, the Cocos Islands, Norfolk Island, Nauru, Tuvalu, and Kiribati. In 2023, there were about A$105.7 billion worth of Australian currency in circulation, including cash reserves held by the banking system and cash in circulation in other countries. The Royal Australian Mint has produced over 14 billion circulating coins since its opening in 1965, with a capacity to produce more than 600 million coins annually.
| Characteristics | Values |
|---|---|
| Date of introduction | 14 February 1966 |
| Replaced | Australian pound |
| Conversion rate | A$2 = A£1 |
| Subdivisions | 100 cents |
| Symbol | $ |
| Currency in circulation in 2023 | A$4.4 billion in coins and A$101.3 billion in notes |
| Average currency per person in Australia in 2023 | A$6,700 |
| Legal tender in | Christmas Island, Cocos (Keeling) Islands, Norfolk Island, Kiribati, Nauru, and Tuvalu |
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What You'll Learn
The Australian dollar was introduced in 1966
The Australian dollar was introduced on 14 February 1966, replacing the non-decimal Australian pound. The conversion rate was set at two dollars to the pound (A£1 = A$2). The $ symbol was intended to have two strokes, but the version with one stroke was also considered acceptable.
In 1966, coins were introduced in denominations of 1 and 2 cents (bronze); 5, 10, and 20 cents (cupronickel; 75% copper, 25% nickel); and 50 cents (silver, then cupronickel). The 50-cent silver coins were no longer minted after March 1968 as the value of the silver content exceeded the face value of the coins.
The first paper issues of the Australian dollar were also released in 1966, with $1, $2, $10, and $20 notes having exact equivalents in the former pound notes. The $5 note was issued a year later, followed by the $50 in 1973 and the $100 in 1984.
To help Australians adjust to the new currency, a publicity campaign was launched featuring the character Dollar Bill, who was created by Monty Wedd and drawn by Laurie Sharpe. The campaign included television advertisements, brochures, leaflets, games, and play money for school students and money handlers.
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The Australian dollar is a reserve currency
The Australian dollar was introduced in 1966 to replace the Australian pound, with the conversion rate of two dollars to the pound. In 2023, there were A$4.4 billion in coins and A$101.3 billion in notes in circulation, or around A$6,700 per person in Australia.
A reserve currency is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. It can be used in international transactions, international investments, and all aspects of the global economy. It is often considered a hard currency or safe-haven currency. The Australian dollar is the reserve currency of the Asia-Pacific region, playing a similar role to that of the Canadian dollar in the Americas.
The US dollar has been the world's principal reserve currency since the end of World War II and is the most widely used currency for international trade. However, some experts argue that the high foreign demand for dollars comes at a cost to export-heavy US states, resulting in trade deficits and lost jobs. The dollar's dominance could be at risk as many emerging economies have increasingly sought ways to conduct trade in non-dollar currencies, a process known as de-dollarization.
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Australian dollar coins and notes
The Australian dollar was introduced as a decimal currency on 14 February 1966, replacing the non-decimal Australian pound. At the time, the dollar was equivalent in value to 10 shillings (half a pound) in the former currency. The $1 banknote was replaced by a $1 coin in 1984, and the $2 banknote was replaced by a smaller $2 coin in 1988. The $1 and $2 coins are often referred to as "gold coins".
The Royal Australian Mint, located in Canberra, produces Australia's coins. Each Australian coin has a heads side and a tails side. The heads side features a picture of Queen Elizabeth II and the year it was made, with newer coins featuring King Charles III. The tails side features a unique Australian design and indicates the coin's value. Each coin is a different size, making it possible to distinguish between them by touch. The 5, 10, 20, and 50-cent coins are silver in colour, while the 1 and 2-dollar coins are gold. The 50-cent coin has 12 flat sides, changing from its original circular shape to avoid confusion with the 20-cent coin. The 1 and 2-cent coins were discontinued in 1991 and withdrawn from circulation in 1992, with cash transactions now rounded to the nearest 5 cents.
The Reserve Bank of Australia prints the notes for Australian currency. Each note features important Australians and unique Australian designs on both sides and has a distinct size and colour. For example, the 50-dollar note is large and yellow, while the 5-dollar note is small and purple. Australia was the first country to print notes on polymer plastic instead of paper, and the first polymer banknote was issued in 1988 as a $10 note commemorating the bicentenary of European settlement in Australia. All previous notes of the Australian dollar remain legal tender.
In addition to the coins and notes in circulation, Australia also has collectible coins, which are legal tender and can be used as currency or converted into standard coinage at a bank. These include aluminium bronze, silver, gold, and bi-metal coins, as well as nugget coins issued in various denominations.
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The Australian dollar is legal tender in some external territories
The Australian dollar is the official currency and legal tender of Australia, including all of its external territories, and three independent sovereign Pacific Island states: Kiribati, Nauru, and Tuvalu. The Australian dollar was introduced on 14 February 1966, replacing the non-decimal Australian pound. At the time, the conversion rate was set at two dollars to the pound (A£1 = A$2).
The Australian dollar is also legal tender in several of Australia's external territories, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. In these territories, the Australian dollar circulates alongside other currencies, such as the New Zealand dollar in Norfolk Island. The Australian dollar was also previously the legal tender in Papua New Guinea and the Solomon Islands until they introduced their own currencies in 1975 and 1977, respectively.
In addition to its use in external territories, the Australian dollar has been adopted as the official currency by three independent sovereign Pacific Island states: Kiribati, Nauru, and Tuvalu. These countries do not have their own central bank and have historically relied on the Australian dollar as their dominant currency. As a result, the Australian dollar circulates freely and is widely accepted in these countries.
The Australian dollar has been a stable and reliable currency, backed by the strong Australian economy. It is a reserve currency and consistently ranks among the most traded currencies in the world. Its popularity is further enhanced by its relative lack of central bank intervention and the general stability of Australia's economic and political systems. These factors contribute to the widespread use and recognition of the Australian dollar beyond Australia's borders.
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The Australian dollar's exchange rate
The Australian dollar was introduced as a decimal currency on 14 February 1966, replacing the non-decimal Australian pound. The conversion rate at the time was two dollars to the pound (A$2 = A£1). The Australian dollar is subdivided into 100 cents, and the $ symbol precedes the amount.
On its introduction, the $ symbol was intended to have two strokes, but the version with one stroke has always been acceptable. In 1966, coins were introduced in denominations of 1 and 2 cents (bronze); 5, 10, and 20 cents (cupronickel); and 50 cents (silver, then cupronickel). The 50-cent silver coins were no longer minted after March 1968, as the value of the silver content exceeded the face value of the coins.
In 1984, the $1 banknote was replaced by a $1 coin, and the $2 banknote was replaced by a smaller $2 coin in 1988. The 1 and 2 cent coins were discontinued in 1991 and withdrawn from circulation in 1992. Since then, cash transactions have been rounded to the nearest 5 cents.
The Australian dollar is a reserve currency and one of the most traded currencies globally. Economists posit that commodity prices are the dominant driver of the Australian dollar, and this means that changes in its exchange rates occur in ways opposite to many other currencies. For decades, Australia's balance of trade has depended primarily on commodity exports such as minerals and agricultural products. This means the Australian dollar varies significantly during the business cycle, rallying during global booms as the country exports raw materials, and falling during recessions as mineral prices slump or when domestic spending overshadows export earnings.
The Australian dollar is legal tender in its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is also the official currency in Kiribati, Nauru, and Tuvalu.
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Frequently asked questions
As of 2023, there were A$4.4 billion in coins and A$101.3 billion in notes of Australian currency in circulation, or around A$6,700 per person in Australia.
The Reserve Bank of Australia issues AUD notes in five denominations: $5, $10, $20, $50 and $100.
There are six denominations of Australian dollar coins: 5c, 10c, 20c, 50c, $1 and $2.
