Ruqayyah Snyder
The Kiribati dollar is one of the two official currencies of Kiribati, the other being the Australian dollar. The Australian dollar was adopted as the official currency of Kiribati on July 12, 1979, and has been the primary medium of exchange in the country since, reflecting its close ties with Australia. The Australian dollar is also used because Kiribati has limited economic activity, and the government feels it is more practical and cost-effective to use Australian coins rather than mint additional Kiribati coins.
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What You'll Learn
The Kiribati dollar is pegged to the Australian dollar
The Kiribati dollar is one of the two official currencies of Kiribati, the other being the Australian dollar. The Kiribati dollar is pegged to the Australian dollar at a 1:1 ratio. This means that the two currencies are used interchangeably in Kiribati, with one Kiribati dollar being equal in value to one Australian dollar.
The history of the Australian dollar as the official currency of Kiribati dates back to 1966, when the new Australian dollar replaced the pound notes in the Gilbert and Ellice Islands, of which Kiribati was then a part. Following Kiribati's independence in 1979, there was a call for the issuance of coinage to legitimise its new political status. As a result, Kiribati introduced its first coins, which were directly pegged to the Australian dollar. The coins were issued in denominations of 1, 2, 5, 10, 20, and 50 cents, as well as a 1-dollar coin. These coins featured designs that celebrated the history and culture of Kiribati, often depicting local animals, ocean life, and cultural symbols.
Over time, the use of Australian currency in Kiribati became more prevalent, especially in more populated regions. The Kiribati government found it more practical and cost-effective to use Australian coins rather than mint additional Kiribati coins. As a result, Kiribati coins became less common, with the last minor emission occurring in 1992. Today, Kiribati coins are considered rare, and older coins are often sought after by collectors.
The close link between the Kiribati dollar and the Australian dollar has had economic implications for the country. Since the currencies are linked at a fixed rate, Kiribati has limited freedom to change its monetary policies independently. This can impact the country's ability to react to changes in the global economy or rising prices. Additionally, the fixed exchange rate between the two currencies can benefit local distributors when the Kiribati dollar is equal to the Australian dollar in international markets, as it helps them avoid extra costs associated with fluctuating forex rates.
The use of the Australian dollar as the official currency in Kiribati reflects the country's close ties with Australia. The Australian dollar is widely accepted in Kiribati, making it convenient for visitors from other countries who can use their Australian dollars without the need for currency exchange. This convenience for travellers is further enhanced by the widespread acceptance of credit and debit cards, as well as the popularity of mobile payment services such as Apple Pay and Google Pay. However, it is still advisable to carry cash for small purchases, tipping, and emergencies, as some smaller shops and remote areas may not accept card payments.
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Australian currency is practical and cost-effective
The Australian dollar is the official currency in Kiribati, alongside the Kiribati dollar. The Australian dollar is also the legal tender in Australia's external territories, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. The Australian dollar was introduced in Kiribati in 1979, replacing the pound notes that were previously used.
Using Australian currency is practical and cost-effective for several reasons. Firstly, Kiribati has not issued local coinage in a long time, and Australian coins are more readily available in populated regions. Secondly, the Kiribati government finds it more cost-effective to use Australian coins rather than mint additional Kiribati coins. The Australian dollar is also a widely accepted and recognised currency, making it convenient for tourists and visitors to Kiribati, who can easily use their Australian dollars or exchange them at local banks or exchange bureaus.
The Australian dollar is also practical due to its close ties with Kiribati. The Kiribati dollar is pegged at a 1:1 ratio to the Australian dollar, and both currencies are used interchangeably in daily transactions. This parity between the two currencies simplifies transactions and avoids extra costs from changing forex rates, benefiting local distributors and businesses.
Additionally, the Australian dollar is a stable and traded currency. In 2022, it was the sixth most-traded currency in the foreign exchange market and the sixth most-held reserve currency globally. While exchange rates fluctuate, the Australian dollar has maintained its value, with a history of recovering from lows and reaching parity with the US dollar. This stability provides a reliable medium of exchange for Kiribati and contributes to its practicality.
Moreover, the Australian dollar is divided into 100 cents, making it convenient for smaller transactions and allowing for a range of denominations to suit various purchase values. The use of Australian currency in Kiribati also reflects the historical influence of Australia in the region, as Australian pounds were introduced as early as 1914 and continued to be the main source of exchange until the introduction of the Australian dollar in 1966.
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The Australian dollar is the official currency
The Australian dollar is divided into 100 cents. In Kiribati, cash is still the main way to pay, especially on the outer islands, and most daily activities use the Australian dollar or the Kiribati dollar. The Kiribati dollar is pegged at a 1:1 ratio to the Australian dollar, and Australian coins are more frequent than local coinage in more populated regions. The Kiribati dollar is no longer issued, and the government feels it is more practical and cost-effective to use Australian coins.
The Australian dollar is the legal tender in its external territories, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is also the official currency in Nauru and Tuvalu. In 2023, there were A$4.4 billion in coins and A$101.3 billion in notes of Australian currency in circulation. The Australian dollar was the sixth most-traded currency in the foreign exchange market in April 2022.
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The Australian pound was the main source of exchange
In 1966, the Australian pound was replaced by the Australian dollar as the official currency of the Gilbert and Ellice Islands. This was a decimal currency, with a conversion rate of two dollars to the pound. The Australian dollar became the official currency of Kiribati after it gained independence, and it remains the dominant currency in the country today. The Kiribati dollar is the other official currency of Kiribati, but it is pegged at a 1:1 ratio to the Australian dollar, and Australian dollars are accepted everywhere in the country. Kiribati no longer issues its own coinage, and Australian coins are more frequently used in more populated areas.
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Kiribati's special coins are collectors' items
Kiribati's currency is the Kiribati dollar, which is pegged at a 1:1 ratio to the Australian dollar, the other official currency of Kiribati. The Australian dollar was adopted as the official currency of Kiribati in 1979, and it has been the primary medium of exchange in the country since then, reflecting its close ties with Australia.
Kiribati has issued several special commemorative coins, including many in silver or gold, for collectors. These coins are distinct in their lustre and are attractive to magnets. They were produced to compensate for Australia's discontinuation of the two lowest denominations. The higher denominations of Kiribati coins are generally gold proofs, attracting attention from gold investors and regular coin collectors.
The Kiribati coins were first issued in 1979, the same year as the country's independence from Great Britain. The coins were designed by sculptor and engraver Michael Hibbit. The primary side of all Kiribati coins depicts the national crest, while the obverse depicts flora, fauna, and items of cultural importance to the islands.
Kiribati no longer issues local coinage, so most examples are either uncirculated from the bank or heavily used. Australian coinage has become more frequent than local coinage in more populated regions, as the government feels it is more practical and cost-effective to use Australian coins rather than mint additional Kiribati coins. As a result, Kiribati's special coins are now collectors' items.
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Frequently asked questions
The Australian dollar is the official currency in Kiribati. The Kiribati dollar is the other official currency, but it is pegged at a 1:1 ratio to the Australian dollar, and Australian dollars are more common in practice.
Australian pound sterling banknotes were introduced to the region in 1914. In 1966, the new Australian dollar became the official currency of the Gilbert and Ellice Islands, which included Kiribati. The Australian dollar has been the primary medium of exchange in the country since.
The Kiribati dollar is closely linked to the Australian dollar, so the country has little freedom to change its monetary policy. This can limit how well it reacts to changes in the global economy or rising prices.
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