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Australia's currency is known as the Australian dollar, which was introduced in 1966. Before this, the Australian pound was the country's currency. Introduced in 1910, the Australian pound was at par with the British pound, and both currencies were on the gold standard. The Australian pound was subdivided into 20 shillings, and one shilling was subdivided into 12 pence. Australia's first gold coins were minted in 1855, and its coins are now produced at the Royal Australian Mint in Canberra. While Australian and British currencies were once closely linked, they are now distinct.
| Characteristics | Values |
|---|---|
| Australian currency before the Australian dollar | Australian pound |
| Australian pound subdivided into | 20 shillings and one shilling subdivided into 12 pence |
| Australian pound introduced in | 1910 |
| Australian pound fixed to | British pound |
| Australian pound value compared to British pound | A£1 = UK£1 |
| Australian pound on the | gold standard |
| Pound sterling left the gold standard in | 1914 |
| Australian pound devalued against sterling in | 1929 |
| Australian pound re-pegged to sterling in | 1931 |
| Value of Australian pound compared to sterling in 1931 | A£1 = 16s sterling |
| Australian dollar pegged to sterling until | 1967 |
| Value of Australian dollar compared to sterling in 1967 | £1 sterling = A£1 5s = A$2.50 |
| Australian dollar floated on the forex market in | 1983 |
| Australian dollar highest value against USD | 15 October 2010 |
| Australian coins produced at | Royal Australian Mint in Canberra |
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What You'll Learn
Historical context: British influence
The historical context of Australian currency is deeply intertwined with British influence, dating back to the early days of the New South Wales colony. In the late 18th and early 19th centuries, there was a scarcity of coins in the colony, leading to the circulation of British and foreign coinage, including Dutch, Indian, and Portuguese currencies. To address this, Governor Lachlan Macquarie introduced the coined "holey dollar" in 1813, created by punching a round piece out of the centre of Spanish dollars. This unique currency had no value outside the colony, ensuring its circulation within New South Wales.
In the 1820s, Britain provided its Australian colonies with an adequate supply of British coins and legislated their exclusive use in Australia. This marked the beginning of a long period of British influence on Australian currency. The Coinage Act of 1909 distinguished between "British coin" and "Australian coin", granting both equal status as legal tender. The Act authorised the production of Australian coins with dimensions and specifications mirroring those of British coins.
The Australian pound, introduced in 1910, was initially at parity with the British pound, reflecting their historical ties and the perceived stability of the British currency. This fixed exchange rate of one Australian pound to one British pound lasted until 1931 when the Australian pound was devalued due to economic factors. Even after this devaluation, Australia continued to peg its currency to the British pound at a new rate of one Australian pound to 16 shillings sterling.
Australia's currency remained closely linked to the British pound and was influenced by Britain's economic decisions. For example, when Britain removed sterling from the gold standard in 1914, it had a significant impact on the Australian economy. Australia's transition to decimal currency, the Australian dollar, in the 1960s, marked a shift towards greater autonomy in its monetary policy, although British influence continued to be a consideration in this process.
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The Australian pound
During World War II, the Empire of Japan produced currency notes denominated in the Australian pound for use in Pacific island countries intended for occupation. The Australian pound was fixed in value to sterling, so when Britain removed sterling from the gold standard in 1914, Australia was also affected. In 1929, as an emergency measure during the Great Depression, Australia left the gold standard, resulting in a devaluation of the Australian pound relative to sterling.
In 1949, when the United Kingdom devalued sterling against the US dollar, Australian Prime Minister Ben Chifley followed suit to prevent the Australian pound from becoming overvalued in sterling zone countries, which were Australia's primary trading partners at the time. As a result, the Australian pound decreased in value from US$3.224 to US$2.24.
In summary, the Australian pound was the currency of Australia until 1966 when it was replaced by the Australian dollar. It was initially equal in value to the British pound but underwent devaluation in 1931. The Australian pound was also used in New Zealand and was affected by global economic events such as the removal of sterling from the gold standard and the devaluation of sterling against the US dollar.
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The Australian dollar
Prior to the adoption of the Australian dollar, the Australian pound was introduced in 1910 at par with the British pound. The Australian pound was fixed to the British pound, which meant that it was also on the gold standard. The Australian pound was subdivided into 20 shillings, and one shilling was subdivided into 12 pence.
In 1914, the British government removed sterling from the gold standard, which had far-reaching effects on the Australian economy. Australia left the gold standard in 1929 as an emergency measure during the Great Depression, resulting in a devaluation relative to sterling. A variety of pegs to sterling were applied until December 1931, when the Australian government devalued the local unit by 20%, making one Australian pound equal to 16 shillings sterling.
In 1946, Australia maintained a peg under the Bretton Woods system, a fixed exchange rate system that pegged the U.S. dollar to gold. However, the Australian dollar was effectively pegged to sterling until 1967, when Australia did not follow the pound sterling devaluation and remained fixed to the U.S. dollar.
In December 1983, the Australian Labor government floated the dollar, allowing it to be freely traded on the forex market. The highest value the Australian dollar reached against the USD was on 15 October 2010, when it briefly traded above the USD.
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Exchange rates
The history of Australian currency is closely tied to the British currency system. When the colony of New South Wales was established in 1788, colonists relied on barter, rum, and foreign currencies such as Spanish dollars and Dutch guilders. In the 1820s, Britain provided its Australian colonies with an adequate supply of British coins and legislated their exclusive use in the colonies.
In 1910, the Deakin government's Coinage Act distinguished between "British coin" and "Australian coin", granting both legal tender status of equal value. The Australian pound was introduced, pegged at par with the British pound (A£1 = UK£1). This reflected Australia's historical ties and the perceived stability of the British pound.
During the Great Depression, Australia left the gold standard, resulting in a devaluation relative to sterling. In 1931, the Australian pound was devalued to A£1 = 16 shillings sterling, or one pound sterling being equal to 25 Australian shillings.
From 1946 to 1967, Australia maintained a peg under the Bretton Woods system, which fixed the exchange rate between the US dollar and gold. During this time, the Australian dollar was effectively pegged to sterling. However, in 1967, Australia did not follow the pound sterling devaluation and instead fixed its currency to the US dollar.
In 1983, the Australian dollar was allowed to float on the forex market, with its exchange rate reflecting the balance of payments, supply, and demand in international money markets. Since then, the Australian dollar has fluctuated in value relative to the US dollar. In October 2010, the Australian dollar briefly reached parity with the US dollar, trading above it for a few seconds.
Australia's transition to a floating exchange rate and its historical ties to the British currency system have influenced its exchange rate dynamics. Today, Australia's currency remains popular and easily accessible, but finding favourable exchange rates can be challenging. Exchange rates fluctuate daily, and individuals are advised to consult reliable sources for the most up-to-date information when exchanging currencies.
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Commemorative coins
The first commemorative coins were minted in 1970 to celebrate James Cook's exploration of the east coast of Australia. These were 50-cent coins, which were dodecagonal (12-sided) to distinguish them from the 20-cent coins. The original 50-cent coin, which was circular, contained 80% silver and 20% copper, and its metal was worth more than its face value. The 12-sided design was introduced in 1969, with the commemorative design minted in 1970.
The Royal Australian Mint has also issued commemorative coins to mark significant occasions, such as the Silver Jubilee of Queen Elizabeth II in 1977, the wedding of Prince Charles and Lady Diana Spencer in 1981, the Brisbane Commonwealth Games in 1982, and the Australian Bicentenary in 1988. More recently, in 2012, a $2 commemorative coin was released to commemorate Remembrance Day, featuring a poppy and the words "Remembrance Day" and "Lest We Forget". In 2022, commemorative coins were issued to honour frontline workers.
In addition to the above, the Royal Australian Mint has also honoured its predecessors by creating limited-edition commemorative coins. For example, in 2005, a commemorative coin was minted to mark the 150th birthday of the Sydney Mint, which was established in 1855 as a branch of the Royal Mint.
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Frequently asked questions
No, Australian money is not the same as British money. Australia uses Australian dollars, while the UK uses pounds.
The Australian dollar is the currency of Australia, which is made up of 100 cents. It was adopted in 1966 when Australia switched to a decimal currency.
Yes, Australia used the Australian pound from 1910 until 1966. The Australian pound was initially worth the same as the British pound, but it was later devalued.
Australia switched to the dollar to assert its independence from the UK. The decision to switch to a decimal currency was also pragmatic and economic, as it was expected to save the Australian economy money.
No, you cannot use British money in Australia. You will need to exchange your pounds for Australian dollars before your trip or while you are there.
