The Australian dollar was introduced as adecimal currency on 14 February 1966 to replace the non-decimalAustralian pound, with the conversion rate of two dollars to the pound (£A1 = A$2). It is subdivided into 100cents. The $ symbol precedes the amount. On the introduction of the currency, the $ symbol was intended to have two strokes, but the version with one stroke has also always been acceptable.[10][11]
In 2023[update], there were A$4.4 billion in coins[12] and A$101.3 billion in notes[13] of Australiancurrency in circulation, or around A$6,700 per person in Australia,[14] which includes cash reserves held by the banking system and cash in circulation in other countries or held as aforeign exchange reserve.
BeforeFederation in 1901, the six colonies that comprised Australia had separate currencies, all of which closely replicated theBritish currency system, and were usually exchangeable with each other on a one-to-one basis. Hence Federation was not seen as urgently requiring a single, unified currency. For another 10 years, colonial banknotes and coins continued to be the main circulating currencies.
In 1902, a select committee of theHouse of Representatives, chaired byGeorge Edwards, had recommended that Australia adopt a single, national decimal currency, with a pound divided into tenflorins and each florin comprising 100 cents.[17] However, the recommendation was not acted upon.
TheAustralian pound (£A) was introduced in 1910, at par with thepound sterling – £A1 = £1 (UK). Like the UK pound, it was divided into 240 pence, or 20 shillings (each comprising 12 pence). In December 1931, the Australian currency was devalued by 25%, so that one pound five shillings Australian was equivalent to one pound sterling.[18]
In 1937, a bankingroyal commission, appointed by theLyons government, recommended that Australia adopt "a system of decimal coinage ... based upon the division of the Australian pound into1000 parts".[19][20] This recommendation was not accepted either.
1966 government advertisement jingle on the change to decimal currency
In February 1959, treasurerHarold Holt appointed a Decimal Currency Committee, chaired byWalter D. Scott, to examine the merits of decimalisation. The committee reported in August 1960 in favour of decimalisation and proposed that a new currency be introduced (from February 1963), to be modelled on South Africa's replacement of theSouth African pound with therand (worth 10 shillings or1⁄2 pound). TheMenzies government announced its support for decimalisation in July 1961, but delayed the process in order to give further consideration to the implementation process.[21] In April 1963, Holt announced that a decimal currency was scheduled to be introduced in February 1966, with a base unit equal to 10 shillings, and that a Decimal Currency Board would be established to oversee the transition process.[19]
A public consultation process was held in which over 1,000 names were suggested for the new currency. This was reduced to a shortlist of seven names: austral, crown, dollar, pound, regal, tasman and royal.[22] In June 1963, Holt announced that the new currency would be called the "royal". This met with widespread public disapproval, and three months later it was announced that it would instead be named the "dollar".[23]
The pound was replaced by the dollar on 14 February 1966[24] with the conversion rate of A$2 = £A1. For example, a pre-decimal amount of nine pounds, sixteen shillings and sixpence (£A9 16s 6d) became $19.65 in terms of dollars and cents. Since Australia was still part of the fixed-exchangesterling area, the exchange rate was fixed to thepound sterling at a rate of A$1 = 8s sterling (or £1 (UK) = A$2.50, and in turn £1 (UK) =US$ 2.80). In 1967, Australia effectively left the sterling area when the pound sterling was devalued against the US dollar from US$2.80 to US$2.40, but the Australian dollar chose to retain its peg to the US dollar at A$1 = US$1.12 (hence appreciating in value versus sterling).
In 1966, coins were introduced in denominations of 1 and 2 cents (bronze); 5, 10, and 20 cents (cupronickel; 75% copper, 25% nickel); and 50 cents (silver, then cupronickel). The 50-cent coins in 80% silver were no longer minted after March 1968 due to the intrinsic value of the silver content rising to exceed the face value of the coins.[25]Aluminium bronze (92% copper, 6% aluminium, 2% nickel) 1 dollar coins were introduced in 1984, followed by aluminium bronze 2 dollar coins in 1988, to replace the banknotes of that value. In everyday Australian parlance, these coins collectively are referred to as "gold coins". 1 and 2 cent coins were discontinued in 1991 and withdrawn from circulation in 1992; since then cash transactions have beenrounded to the nearest 5 cents.
These images are to scale at 2.5 pixels per millimetre. For table standards, see thecoin specification table.Source: Royal Australian Mint.[27]
Australia's coins are produced by theRoyal Australian Mint, which is located in the nation's capital,Canberra. Since opening in 1965, the Mint has produced more than 14 billion circulating coins, and has the capacity to produce more than two million coins per day, or more than 600 million coins per year.
Current Australian 5, 10 and 20 cent coins are identical in size to the former Australian, New Zealand, and British sixpence, shilling, and two shilling (florin) coins. Pre-decimal Australian coins remain legal tender for 10 cents per shilling. Before 2006 the old New Zealand 5, 10 and 20 cent coins were often mistaken for Australian coins of the same value, and vice versa, and therefore circulated in both countries. The UK replaced these coins with smaller versions from 1990 to 1993, as did New Zealand in 2006. Still, some confusion occurs with the larger-denomination coins in the two countries; Australia's $1 coin is similar in size to New Zealand's $2 coin, and the New Zealand $1 coin is similar in size to Australia's $2 coin.
With a mass of 15.55 grams (0.549 oz) and a diameter of31.51 millimetres (1+1⁄4 in), the Australian 50-cent coin is one of the largest coins used in the world today.
TheRoyal Australian Mint also has an international reputation for producing quality numismatic coins. It has first issued commemorative 50-cent coins in 1970, commemoratingJames Cook's exploration along the east coast of the Australian continent, followed in 1977 by a coin for Queen Elizabeth II'sSilver Jubilee, the wedding ofCharles, Prince of Wales andLady Diana Spencer in 1981, theBrisbaneCommonwealth Games in 1982, and theAustralian Bicentenary in 1988. Issues expanded into greater numbers in the 1990s and the 21st century, responding to collector demand. Commemorative designs have also been featured on the circulating two dollar, one dollar, and 20 cent coins.
In commemoration of the 40th anniversary ofdecimal currency, the 2006 mintproof anduncirculated sets included one- and two-cent coins. In early 2013, Australia's first triangular coin was introduced to mark the 25th anniversary of the opening of Parliament House. The silver $5 coin is 99.9% silver, and depicts Parliament House as viewed from one of its courtyards.[28]
The first paper issues of the Australian dollar were issued in 1966. The $1, $2, $10 and $20 notes had exact equivalents in the former pound notes. The $5 note was issued in 1967, the $50 was issued in 1973 and the $100 was issued in 1984.[29]
The $1 banknote was replaced bya $1 coin in 1984, while the$2 banknote was replaced bya smaller $2 coin in 1988.[30] Although no longer printed, all previous notes of the Australian dollar remain legal tender.[31]
Australia was the first country to producepolymer banknotes,[37] more specifically made ofpolypropylene polymer, which were produced byNote Printing Australia. These polymer notes are cleaner than paper notes, are more durable and easily recyclable.
The first polymer banknote was issued in 1988 as a $10 note[38] commemorating the bicentenary of European settlement in Australia. The note depicted on one side a young male Aboriginal person in body paint, with other elements of Aboriginal culture. On the reverse side was the shipSupply from the First Fleet, with a background of Sydney Cove, as well as a group of people to illustrate the diverse backgrounds from which Australia has evolved over 200 years.
The first polymer series was rolled out starting 1992 and featured the following persons:
The $50 note features Aboriginal writer and inventorDavid Unaipon (1872–1967), and Australia's first female parliamentarian,Edith Cowan (1861–1932).[40]
The $20 note features the founder of the world's first aerial medical service (theRoyal Flying Doctor Service), theReverend John Flynn (1880–1951), andMary Reibey (1777–1855), who arrived in Australia as a convict in 1792 and went on to become a successful shipping magnate and philanthropist.[41]
The $10 note features the poetsBanjo Paterson (1864–1941) andDame Mary Gilmore (1865–1962). This note incorporates micro-printed excerpts of Paterson's and Gilmore's work.[42]
A special centenary issue of the $5 note in 2001 featuredSir Henry Parkes andCatherine Helen Spence. In 2015–2016 there were petitions to featureFred Hollows on the upgraded $5 note, but failed to push through when the new note was introduced on 1 September 2016.[44][45][46]
On 27 September 2012, theReserve Bank of Australia stated that it had ordered work on a project to upgrade the current banknotes. The upgraded banknotes would incorporate a number of new future proof security features[48] and include tactile features like Braille dots for ease of use of the visually impaired.[49][50] All persons featured on the first polymer series were retained on the second polymer series. However, following the death of Queen Elizabeth II, the government has announced that the $5 note will be replaced with a design reflecting Indigenous history and culture.[51]
These images are to scale at 0.7 pixel per millimetre (18 pixel per inch). For table standards, see thebanknote specification table.Source: Reserve Bank of Australia.[57][58]
Remarks:
Thickness and weight of notes is +/-5 percent per 1,000 notes
A new clear polymer window that goes from the top to the bottom of the note that is all clear
Embossing is inside the small window.
There are two blocks of micro-text on the reverse side of the Fourth series five dollar note, which contains excerpts of theConstitution of Australia
Prior to 1983, Australia maintained afixed exchange rate. The Australian pound was initially at par from 1910 with the British pound or £A1 = £1 (UK); from 1931 it was devalued to £A1 = 16s sterling. This reflected 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 under theBretton Woods system, a fixed exchange rate system that pegged theU.S. dollar to gold, but the Australian dollar was effectively pegged to sterling until 1967 at £1 sterling = £A1 5s = A$2.50 = US$2.80. In 1967 Australia did not follow the pound sterling devaluation and remained fixed to the U.S. dollar at A$1 = US$1.12.
With the breakdown of the Bretton Woods system in 1971, Australia converted the traditional peg to a fluctuating rate against the US dollar. In September 1974, Australia valued the dollar against a basket of currencies called thetrade weighted index (TWI) in an effort to reduce the fluctuations associated with its tie to the US dollar.[59] The daily TWI valuation was changed in November 1976 to a periodically adjusted valuation.
The highest valuation of the Australian dollar relative to the U.S. dollar was during the period of the peg to the U.S. dollar. On 9 September 1973, the peg was adjusted to US$1.4875, the fluctuation limits being changed to US$1.485–US$1.490;[60] on both 7 December 1973 and 10 December 1973, the noon buying rate in New York City for cable transfers payable in foreign currencies reached its highest point of 1.4885 U.S. dollars to one dollar.[61]
1983ABC news report on the first day of trading with a floating dollar
In the two decades that followed, its highest value relative to the US dollar was $0.881 in December 1988. The lowest ever value of the dollar after it was floated was 47.75 US cents in April 2001.[63] It returned to above 96 US cents in June 2008,[64] and reached 98.49 later that year. Although the value of the dollar fell significantly from this high towards the end of 2008, it gradually recovered in 2009 to 94 US cents.
On 15 October 2010, the dollar reached parity with the US dollar for the first time since becoming a freely traded currency, trading above US$1 for a few seconds.[65] The currency then traded above parity for a sustained period of several days in November, and fluctuated around that mark into 2011.[66] On 27 July 2011, the dollar hit a record high since floating, at $1.1080 against the US dollar.[67] Some commentators speculated that its high value that year was related toEurope's sovereign debt crisis, and Australia's strong ties with material importers in Asia and in particularChina.[68]
Since the end of China's large-scale purchases of Australian commodities in 2013, however, the Australian dollar's value versus the US dollar has since plunged to $0.88 as of end-2013, and to as low as $0.57 in March 2020. As of 2024, it has traded at a range of $0.63 to $0.68.
The Australian dollar is popular with currency traders, because of the comparatively high interest rates in Australia, the relative freedom of the foreign exchange market from government intervention, the general stability ofAustralia's economy and political system, and the prevailing view that the Australian dollar offers diversification benefits in a portfolio containing the major world currencies, especially because of its greater exposure to Asian economies and the commodities cycle.[70]
Economists posit that commodity prices are the dominant driver of the Australian dollar, and this means changes in exchange rates of the Australian dollar occur in ways opposite to many other currencies.[71] For decades, Australia's balance of trade has depended primarily upon commodity exports such as minerals and agricultural products. This means the Australian dollar varies significantly during the business cycle, rallying during global booms as Australia exports raw materials, and falling during recessions as mineral prices slump or when domestic spending overshadows the export earnings outlook. This movement is in the opposite direction to other reserve currencies, which tend to be stronger during market slumps as traders move value from falling stocks into cash.
The Australian dollar is areserve currency and one of the most traded currencies in the world.[70] Other factors in its popularity include a relative lack of central bank intervention, and general stability of the Australian economy and government.[72] In January 2011 at theWorld Economic Forum inDavos,Switzerland,Alexey Ulyukaev announced that theCentral Bank of Russia would begin keeping Australian dollar reserves.[73]
Most traded currencies by value Currency distribution of global foreign exchange market turnover[74]
Australian notes arelegal tender throughout Australia by virtue of section 36(1) of theReserve Bank Act 1959 without an amount limit.[75] Section 16 of theCurrency Act 1965 similarly provides that Australian coins intended for general circulation are also legal tender, but only for the following amounts:[76]
1c and 2c coins (withdrawn from circulation from February 1992, but still legal tender): for payments not exceeding 20c
5c, 10c, 20c and 50c (of any combination): for payments not exceeding $5
$1 coins: for payments not exceeding $10
$2 coins: for payments not exceeding $20
Non-circulating $10 coins: for payments not exceeding $100[1]
Coins of other denominations: no lower limit
However, being legal tender does not necessarily oblige businesses to accept cash. The Reserve Bank states that businesses can set commercial terms for a transaction that requires the use of a non-cash payment.[77] However, a business may technically be required to accept cash if they are taken to court, but this is usually not a viable option for consumers.[78]
Australian notes and coins are also legal tender in the independent sovereign states ofKiribati,Nauru, andTuvalu.[5][6][7] Nauru never had its own currency. Tuvalu and Kiribati additionally had their respectiveTuvaluan andKiribati dollars at par with the Australian dollar. They are legal tender in their respective countries but not in Australia. However, both countries no longer produce coinage since the 1990s and have never produced their own banknotes. As a result, the Australian dollar is the dominant currency in both countries.
Tuvalu also issues non-circulating commemorative bullion coins produced by thePerth Mint.[79][80]
^The total sum is 200% because each currency trade is counted twice: once for the currency being bought and once for the currency being sold. The percentages above represent the proportion of all trades involving a given currency, regardless of which side of the transaction it is on.
^Style Manual: For Authors and Printers of Australian Government Publications (1st ed.). Canberra: Commonwealth Government Printing Office. 1966. p. 35.OCLC10365249.
^Australian Decimal Currency Board (1965).The decimal currency handbook : a comprehensive guide to Australia's new decimal currency and the changeover period - planned to begin in 1966. p. 19.NLA:585292.
^Curran, James; Ward, Stuart (2010).The unknown nation: Australia after empire. Carlton, Vic: Melbourne University Publishing. p. 94.ISBN978-0-522-85645-3.
^"Next Generation Banknotes: Additional Feature for the Vision Impaired". www.rba.gov.au (Press release). Media Office-Reserve Bank of Australia. 13 February 2015.
ThePerth Mint is Australia's precious metals mint, making non-circulating/collector coins in silver, gold, andplatinum.
Note Printing Australia is the printer of Australia's notes, and also inventor of the abovementioned polymer banknotes, and world exporter of this technology.
TheMoney Tracker site allows users to track Australian banknotes as they circulate around Australia.
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