The Australian dollar, denoted by AUD or A$, is the official currency of the Commonwealth of Australia (including the Australian Antarctic Territory, Christmas Island, Cocos Islands, Heard Island and McDonald Islands as well as the independent Pacific island states of Kiribati, Nauru and Tuvalu). The AUD is sometimes called the "Aussie" and locally, the "Pacific Peso."
The AUD is the sixth most traded currency in the foreign exchange markets, trailing behind the United States dollar, Japanese yen, euro, British pound sterling and Canadian dollar. Accounting for approximately 5% of worldwide foreign exchange transactions, the AUD is popular among currency traders because of the nation's relative lack of government intervention in the FX market. Additionally, the economy and government are rather stable and the AUD seems to offer diversification benefits in a portfolio containing the major world currencies (for reasons such as greater exposure to Asian economies and the commodities cycle, for example).
Each Australian dollar can be broken down into 100 cents. The smallest coin circulating is equal to five cents; one and two cent coins were discontinued in the early 90s and withdrawn from circulation. Cash transactions are rounded up or down to the nearest multiple of five cents.
The Australian dollar was first introduced in 1966 when it replaced the Australian pound and introduced a decimal system to the nation. Robert Menzies, Australian Prime Minister at the time, wished to name the currency "the Royal" other names such as "the Austral" and "the Koala" were suggested as well. While the name "Royal" was settled upon initially, it proved extremely unpopular amongst the crowds and thus the unusual name was removed and replaced with the "Dollar."
For much of its history, Australia maintained a peg to the British pound reflecting its historical ties as well as a view about the stability in value of the British pound. From 1946 to 1971, Australia maintained a peg to the US dollar under the Bretton Woods System. With the breakdown of the Bretton Woods system in 1971, Australia replaced the mostly fixed peg to a moving peg against the US dollar. In September 1974, Australia moved to a peg against a basket of currencies called the TWI (trade weighted index) in an effort to reduce fluctuations associated with its peg to the US dollar. The peg to the TWI was changed to a moving peg in November 1976 where the actual value of the peg was periodically adjusted. In December 1983, the Australian government "floated" the Australian dollar, meaning that it no longer managed its value by reference to any foreign currency.
Sovereign Ratings for Australia
Sovereign credit ratings play an important part in determining a country's access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.
What does it look like?
The Commonwealth of Australia is a constitutional monarchy with a parliamentary system of government. The government has three main arms: the executive, legislative and judiciary.
The executive branch is called the Federal Executive Council and is comprised of the Governor-General and executive councilors. The councilors, in practice, are the prime minister and ministers of state, who advise the Governor-General. The Queen is nominally represented by the Governor-General, who is given extensive powers by the Constitution.
The legislative branch is the bicameral Commonwealth Parliament which is made up of the Senate, the upper house (76 members), and the House of Representatives, the lower house (150 members). Members of the lower house are elected from single-member constituencies that are often known as "electorates" or "seats." The more populous a state, the more members it returns to the lower house, with a minimum of five members per state. In the Senate, each state, regardless of population, is represented by 12 senators, and each mainland territory by two. Elections for both chambers are held every three years; typically only half of the Senate seats are put to each election, because senators have overlapping six-year terms. The Government is formed in the lower house, and the leader of the majority party or coalition in the House of Representatives is the Prime Minister.
The judiciary branch is made up of the High Court of Australia and other federal courts. The judiciary became officially independent from that of the United Kingdom in 1986, due to the Australia Act.
- Prominent Figures Governor General: Michael Jeffery, Maj. Gen. (Ret.)
- Prime Minister: John Howard
- Deputy Prime Minister: John Anderson
- Treasurer: Peter Costello
- Special Minister of State: Eric Abetz
- Attorney General: Philip Ruddock
- Chairman, Reserve Bank: Ian J. Macfarlane
- Ambassador to the US: Michael Thawley
Key Economic Factors Economic Overview:
Australia's economy is a Westernized, capitalist one, with a GDP per capita on part with the four dominant economies of Western Europe. The economy is fueled the most by rising output in the domestic economy as well as robust business and consume confidence and rising exports of raw and agricultural goods. The nation puts great emphasis on reforms, low inflation and growing ties with China, all of which have proven helpful in strengthening the economy. Over the past few years, Australia's trade deficit has suffered due to drought, weak foreign demand, and strong import demand. Another large concern of the nation is the rapid increase in domestic housing prices, which have raised the prospects that interest rates will need to be raised to prevent a speculative bubble from forming.
- Key Industries: Mining, industrial and transportation equipment, food processing, chemicals and steel.
- Agricultural Products: Wheat, barley, sugarcane, fruit, cattle, sheep and poultry.
- Export Commodities: Coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment.
- Import Commodities: Machinery and transport equipment, computers and office machines, telecommunication equipment and parts, and crude oil and petroleum products.
- Other Currencies Accepted:All major currenciesAll major currencies
- Currency Peg: No
- Black Market for Currency: No
- Currency Volatility: Low
- Estimated GDP Per Capita: 30,700 USD (2004)
- Languages Spoken: English and other native languages