The Australian Dollar

The Australian dollar ($, A$, AUD) is the currency of Australia and a range of Commonwealth countries like Christmas Island, Norfolk, and the Territory of Cocos Islands. Besides, it is also used in the independent Pacific states of Kiribati, Nauru, and Tuvalu.

The Australian dollar is the sixth most traded currency in the world and has a share of 5% in the foreign exchange market.

Historical Background

The Australian continent was opened much later than North America. The Dutch navigators drew the map of its west coast in the 1650s. Only with the arrival of Captain James Cook, a full exploration of new lands began. Initially, there had been plans to transport the convicts there.

A new British colony, New South Wales, emerged on the continent in 1788. Then in 1828, British Empire took control of the west coast and later spread its influence within the whole continent.

Until the early 20th century, colonisers used the English pound as the metropolitan currency. But there were holey dollars, Spanish coins with the punched-out middles, in New South Wales since 1813.

Those dollars were considered the legit means of payment as well as the small coins (the middles) known as ‘dumps’. They differed only in denominations: dollars were worth five shillings and dumps equaled 15 pence.

It was in 1825 when the national currency of Britain, the pound sterling, emerged. Seventy years later, it was approved as a uniform means of payment within the entire Australian continent and existed till 1910. In 1901, a new country under the name of the Dominion of Australia appeared on the world map and consisted of six colonies of the continent and the island of Tasmania. In nine years, the first national currency, the Australian pound, was issued. One pound equaled 20 shillings according to the pattern of the British metropolitan money. 

Both Australian and British pounds were in circulation within all Dominion’s territories till 1964 with the exchange rate of $1 for £1.

The current Australian dollar was issued in 1966 when the country switched to the decimal system. Since then, AUD has been subdivided into 100 cents. The exchange rate was £2.5 for $1.

Due to the devaluation of the pound sterling to the US dollar, a new Australian currency was pegged to the USD, and later - to the currencies of key economic partners. At first, there was a fixed exchange rate to them, but since 1983 it has been fluctuating.

Both Australian banknotes and coins began to be issued in 1966. At first, there were no 50-dollar notes because paper money was issued in strict accordance with the British pound - 1 AUD, 2 AUD, 10 AUD, and 20 AUD.

It took the whole year for Australians to get used to the decimal system. In 1967, the first five-dollar notes were issued.

Fifty-dollar notes appeared in 1973, and 100 AUD - 11 years later. In the same year, paper notes of A$1 were substituted with coins of the same denomination. In 1988, this also happened to the notes of A$2.

At that time, the first polypropylene banknotes were issued to commemorate the Australian Bicentenary. They featured the portrait of James Cook. It was a constantly changing picture with dependence on an angle of reflection. At present, all Australian paper money is made of polypropylene.

Design 

The money of the new generation has been issued in Australia since 2014. The key difference from the old version is the enhanced protection from counterfeiting and tactile marks for those who have eyesight problems.

Banknotes of the Australian dollar are 65 mm wide with a varying length - from 130 mm to 158 mm. They feature Elizabeth II and some other notable individuals of Australian history on the obverse:

• A$5 is a pale mauve banknote that measures 65 mm by 130 mm and features the British Queen on the obverse and the house of Parliament on the reverse. Eucalyptus flower is visible through the protection window. There are also the banknotes of a brighter mauve color issued later with the same images. The Parliament of Australia is added with the contours of new buildings.
• A$5 of the 2001-series is the banknote featuring Sir Henry Parkes, a painting by Tom Roberts, the Federation Pavilion, and the Royal Exhibition Building in Melbourne on the obverse. Catherine Spence, a part of the Australian anthem, and small portraits of prominent statespeople are depicted on the reverse. A clear window has a form of a leaf.
• A$10 is a blue-coloured banknote issued in 1993 that measures 65 mm by 137 mm and features the poet Banjo Paterson, an excerpt from his poem, a windmill, horses, and the Waltzing Matilda signature on the obverse. The reverse depicts the writer Mary Gilmore, her signature, and a cart. There is a windmill in the clear window.
• A$20 banknote is of red-orange colouration and measures 65 mm by 144 mm. The obverse depicts Mary Reibey, a former convict, but a successful trader later, her schooner Mercury, a compass, and her house in Sydney. On the reverse, there is the portrait of Rev. John Flynn, his aircraft, diagrams, and the man on the camel. A clear window has a compass and the number “20” in the middle. 
• A$50 is a yellow banknote that measures 65 mm by 151 mm and depicts David Unaipon, an Australian engineer and inventor. His invention - sheep clippers, an excerpt from his manuscript, a church, Ngarrindjeri people, and the Southern Cross are shown around the portrait. The reverse side features a politician Edith Cowan, a portrait of a mother and children, the building of Western Australia’s Parliament, and an excerpt from Cowan’s speech.
• A$100 is a green banknote issued in 1996 that measures 65 mm by 158 mm. The obverse features the opera singer Nellie Melba, her theatre, and an episode from a play, where she performed. A lyrebird is depicted on the right. General Sir John Monash, his signature, merit button, and a monument in Melbourne are featured on the reverse along with the battlefield on the right. A clear window has a lyrebird and the number “100” in the middle.

Australian coins are minted by only one authorised organisation - Royal Australian Mint. The obverse of coins features the portrait of Elizabeth II. There are denominations of 5c, 10c, 20c, 50c, A$1, and  A$2 in circulation. The fractional money of 1c and 2c has been withdrawn. The coins are made of various alloys like cupronickel, copper, nickel, and aluminum in different compositions.

There is a series of commemorative 50-cent coins. In 1970, a coin depicting the portrait of the Australian explorer James Cook was issued. Then there were three more issuances. In 1977, the coin was dedicated to the 25th anniversary of Queen Elizabeth II’s ascension. In 1981, a 50-cent coin was issued to commemorate the marriage of Prince Charles and Lady Diana Spencer. In 1982, the coin commemorated the Commonwealth Games. Rare 20-cent and one-dollar coins issued in special series evoke a great interest for coin collectors.

Australian Currency in the World

The economic and political situation in the country is stable. There is no government intervention in the functioning of the currency market. And the interest rates are quite high. All those features attract the attention of global business to the Australian dollar as a trusted means of investment. AUD is interesting for the stock exchange players, particularly those specialising in differences between rates.

The Australian dollar is considered the commodity currency because the country exports considerable amounts of oil, gold, and farm produce. Most of Australia’s partners are concentrated in Asian countries, and China is the leader.