Ruqayyah Snyder
The Australian dollar (AUD) is the official currency of Australia and its external territories, as well as a few other independent countries and territories in the South Pacific. It was introduced in 1966 to replace the Australian pound, with the conversion rate of two dollars to the pound. The $ symbol precedes the amount, and the currency is also referred to as the Aussie dollar. As of 2022, it was the sixth most-traded currency in the foreign exchange market.
| Characteristics | Values |
|---|---|
| Official Currency | Australia, Kiribati, Nauru, Tuvalu, Papua New Guinea, Christmas Island, Cocos Islands, Norfolk Island |
| Currency Code | AUD |
| Other Names | Aussie dollar, Aussie |
| Subdivisions | 100 cents |
| Symbol | $ |
| Symbol Placement | Before the amount |
| Banknotes | Issued by Note Printing Australia |
| Coins | Minted by the Royal Australian Mint |
| Banknote Material | Polymer |
| First Introduced | 14 February 1966 |
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What You'll Learn
Australia's official currency
The Australian dollar (AUD) is the official currency of Australia and its external territories, including Christmas Island, the Cocos Islands, and Norfolk Island. It is also the legal tender of three independent sovereign Pacific Island states: Kiribati, Nauru, and Tuvalu. In addition, the Australian dollar was the official currency of Papua New Guinea until 1975 and the Solomon Islands until 1977.
The Australian dollar was introduced on February 14, 1966, replacing the non-decimal Australian pound. The $ symbol precedes the amount, and each dollar is subdivided into 100 cents. The currency is notable for its use of polymer banknotes, which Australia adopted in 1988 to prevent counterfeiting, becoming the first country to do so. These polymer notes are more durable, recyclable, and resistant to counterfeiting than traditional paper notes.
The Reserve Bank of Australia is responsible for issuing the Australian dollar, and the currency is known for its stability and low inflation rate. As of 2022, it was the sixth most-traded currency in the foreign exchange market and the sixth most-held reserve currency globally. The popularity of the Australian dollar among traders is attributed to various factors, including Australia's abundant natural resources, conservative monetary policies, and relatively high-interest rates.
The Australian dollar has a strong presence in the Asia-Pacific region, and its exchange rate is influenced by demand for Australia's natural resources from Asian countries, particularly China and India. This demand dynamic also contributes to the Australian dollar being classified as a "commodity currency." The Australian dollar has gained international recognition, and its stability and trading popularity make it a significant currency on the global economic stage.
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Kiribati, Nauru, Tuvalu: Pacific Island states
The Australian dollar is the official currency and legal tender of Australia and its external territories, as well as three independent sovereign Pacific Island states: Kiribati, Nauru, and Tuvalu. It was introduced on 14 February 1966 to replace the Australian pound, with a conversion rate of two dollars to the pound. The $ symbol precedes the amount, and the currency is subdivided into 100 cents.
Kiribati, Nauru, and Tuvalu are three of the six countries that use the Australian dollar as their official currency. The other three are Australia and its external territories, Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. The Australian dollar is also legal tender in Papua New Guinea and the Solomon Islands, but these countries have since replaced it with their own currencies.
The Australian dollar is a decimal currency, and its coins and notes are legal tender in the three Pacific Island states. The $1 banknote was replaced by a $1 coin in 1984, and the $2 banknote was replaced by a smaller $2 coin in 1988. In 2006, the 1 cent and 2-cent coins were discontinued and taken out of circulation. All previous notes of the Australian dollar remain legal tender, even though they are no longer printed.
Nauru has never had its own currency, and both Kiribati and Tuvalu have their own dollars, which are at par with the Australian dollar. However, these countries no longer produce their own coinage and have never produced banknotes. As a result, the Australian dollar is the dominant currency in both Kiribati and Tuvalu. Tuvalu also issues non-circulating commemorative bullion coins produced by the Perth Mint.
The Australian dollar is one of the most traded currencies in the world and was the sixth-most traded currency in the foreign exchange market as of April 2022. It is also one of the most-held reserve currencies in global reserves. The value of the Australian dollar is influenced by various factors, including the strength of other currencies, the decisions of central banks, the history of the currency's value, and the trust that it will retain its value in the future.
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Papua New Guinea, Solomon Islands: former AUD users
The Australian dollar is the official currency of Australia and its external territories, as well as three independent sovereign Pacific Island states: Kiribati, Nauru, and Tuvalu. It was introduced as a decimal currency on 14 February 1966, replacing the non-decimal Australian pound.
While Papua New Guinea and the Solomon Islands do not currently use the Australian dollar as their official currency, they have had some historical connection with it. Papua New Guinea's current currency, the kina, has an exchange rate with the Australian dollar, with 1 PGK (Papua New Guinean kina) equal to approximately 0.37 AUD (Australian dollars) as of August 2025. This indicates that the Australian dollar is still relevant and used for exchange in Papua New Guinea.
The Solomon Islands, similarly, have their own currency called the Solomon Islands dollar, which has an exchange rate with the Australian dollar. Money transfer services and exchange rate information apps allow users to convert between the two currencies, indicating that the Australian dollar may be used or exchanged in the Solomon Islands.
Historically, Australia printed polymer notes for its currency and supplied the polymer substrate to a number of countries, including Papua New Guinea and the Solomon Islands. This technology was developed jointly by the Reserve Bank of Australia and the Commonwealth Scientific and Industrial Research Organisation, with Australia being the first country to produce such banknotes. The use of polymer notes made of polypropylene polymer offered advantages such as increased durability and recyclability compared to traditional paper notes.
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Christmas Island, Cocos Islands, Norfolk Island
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.
Christmas Island
Christmas Island is a small Australian island located in the Indian Ocean. The Christmas Island Dollar was the official currency of the island when it was a territory of Great Britain and Singapore. However, the island became a part of Australia and adopted the Australian dollar as its currency in 1958. The process of switching from the local currency to the Australian dollar is called dollarization or currency substitution. Christmas Island has a population of just over 2,000 residents, with an economy based on tourism and phosphate mining.
Cocos Islands
The Cocos (Keeling) Islands are an Australian external territory in the Indian Ocean, comprising a small archipelago approximately midway between Australia and Sri Lanka. The territory consists of two atolls made up of 27 coral islands, of which only West Island and Home Island are inhabited. The population of around 600 people consists mainly of Cocos Malays, who mostly practise Sunni Islam and speak a dialect of Malay. As an Australian external territory, the Cocos Islands use the Australian dollar as their currency.
Norfolk Island
Norfolk Island is a territory of Australia located in the South Pacific Ocean, east of the Australian mainland. It is the main island of the island group that the territory encompasses, with Phillip Island being the second largest. Norfolk Island has an area of 34.6 square kilometres, with no large-scale internal bodies of water and 32 kilometres of coastline. The island uses the Australian dollar as its currency.
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AUD: the Australian dollar acronym
The Australian dollar, known by the acronym AUD, is the official currency of Australia and several independent countries and territories in the South Pacific. These include Papua New Guinea, Christmas Island, the Cocos Islands, Nauru, Tuvalu, Norfolk Island, Kiribati, and the Solomon Islands. The AUD replaced the Australian pound in 1966, with the conversion rate of two dollars to the pound (£A1 = A$2). It is subdivided into 100 cents.
The $ symbol precedes the amount when using the Australian dollar, although for the international foreign exchange market, the abbreviations A$ or AU$ are used to distinguish it from other dollar-denominated currencies. AUD exchange rates are influenced by demand for Australia's natural resources, particularly from Asian countries such as China and India. This demand dynamic also affects the relative price of the AUD.
The Australian dollar was the first currency to introduce polymer banknotes in 1988, specifically made of polypropylene polymer, to prevent counterfeiting. These notes are more durable, cleaner, and easily recyclable. The first polymer banknote was a $10 note commemorating the bicentenary of European settlement in Australia.
The popularity of the AUD among traders is due to various factors, including Australia's conservative monetary policy, high-interest rates, minimal government control over currency trading, and its abundant natural resources.
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Frequently asked questions
The Australian dollar is the official currency of Australia and its external territories, as well as three independent sovereign Pacific Island states: Kiribati, Nauru, and Tuvalu.
As of 2022, the Australian dollar was the official currency in six countries.
The Australian dollar is abbreviated as AUD.
The Australian dollar is sometimes referred to as the "Aussie dollar" or simply the "dollar".
