Australian Dollar (AUD)

The Australian Dollar (AUD) is the world’s fifth most traded currency, and the second youngest among the top five, after the Euro (EUR). It was introduced in 1966 when it replaced the Australian Pound at a rate of two Dollars to the Pound.

Jump to the latest AUD news.

Key Info

Currency code: AUD
Currency symbol: $ (Dollars), c (cents)
Nickname: The ‘Aussie’
Affiliated central bank: Reserve Bank of Australia (RBA)
Key currency pairings: AUD/USD, AUD/EUR, AUD/GBP

Denominations:

Coins: 5c, 10c, 20c, 50c, $1, $2
Notes: $5, $10, $20, $50, $100

Where is the Australian Dollar Used?

The Australian Dollar is used throughout Australia, including its external territories: Christmas Island, the Cocos (Keeling) Islands, and Norfolk Island. It’s also the official currency of three island states in the Pacific Ocean: Kiribati, Nauru, and Tuvalu.

What Affects AUD Exchange Rates?

The Australian Dollar is a complex currency, affected by multiple factors, so sometimes it can be hard to decipher what’s going on.

That said, there are four main factors that drive AUD movement.

Risk Appetite

As a risk-sensitive currency, the ‘Aussie’ often trades in relation to the global market mood. When investors are feeling pessimistic, perhaps due to slowing global growth, geopolitical tensions or rising interest rates, AUD tends to weaken. When the mood is more upbeat, AUD often climbs.

Reserve Bank of Australia

As with most currencies, AUD is affected by the monetary policy of its governing central bank. In Australia this is the Reserve Bank of Australia, or the RBA. When the RBA raises interest rates, this is likely to boost the Australian Dollar, as higher interest rates attract investors.

Commodity Prices

The ‘Aussie’ Dollar is a commodity-linked currency, with its value correlated to certain materials trading on global markets. In particular, the prices of iron ore, coal, petroleum gas and gold – Australia’s most important exports – impact AUD. When these commodities strengthen, the ‘Aussie’ tends to rise too.

Australian and Chinese Economies

Finally, news about Australia’s economy also influences AUD. When the country’s economy is doing well, the currency will likely gain ground; when it’s doing poorly, the ‘Aussie’ Dollar becomes a less attractive investment.

Traders and economists use data releases to gauge the health of the economy, and these publications therefore impact AUD exchange rates. GDP, inflation, unemployment, manufacturing reports and trade balance figures are some of the most impactful.

In addition, the ‘Aussie’ is often traded as a proxy for the Chinese economy. This is because China’s currency – the Renminbi – is tightly controlled and doesn’t fully reflect what’s happening in China. Investors have therefore turned to the Australian Dollar: as China accounts for around 40% of Australia’s exports, the two country’s economies are intertwined.

Latest Australian Dollar News
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