AUD

DEFINITION of 'AUD'

AUD is the abbreviation for the Australian dollar, also known as the Aussie dollar or the Aussie, in the international currency market. AUD replaced the Australian pound in 1966, and 2016 marks its 50th anniversary as a currency. As of April 22, 2016, the value of AUD is approximately $0.77 against the U.S. dollar.

BREAKING DOWN 'AUD'

The Australian dollar is the official currency not only of the country of Australia but also of a number of independent countries and territories in the South Pacific, including Papua New Guinea, Christmas Island, the Cocos Islands, Nauru, Tuvalu and Norfolk Island. The most recent estimate as of April 2016 places the Australian foreign exchange market as the eighth largest in the world, with about half the turnover against AUD and the other half in various currencies against the U.S. dollar. Additionally, AUD has significant turnover in other global markets, which makes it overall the world's fifth-most-traded currency.

History of AUD

Australians first bartered with commodities as currency, but the first real Australian currencies were created after the discovery of gold in 1851. State treasuries and commercial banks created their own banknotes backed by gold. The Australian pound became the national currency in 1910. To simplify international transactions, Australia eliminated the monetary system of pounds, shillings and pence and switched to the new decimal currency of AUD on Feb. 14, 1966.

The first banknotes created in 1966 and 1967 included denominations of $1, $2, $5, $10 and $20. The $1 and $2 denominations were subsequently converted to coins, and $50 and $100 denominations of banknotes were added. AUD banknotes are printed on polymer plastic to make them more difficult to counterfeit.

Value of AUD

At first, AUD was pegged on par with the British pound sterling, and later it was pegged with the U.S. dollar. In 1983, the AUD converted to a floating exchange rate against the U.S. dollar. Its value fluctuates according to factors such as U.S. interest rates and international commodity prices, especially of iron ore and other metals.

In the beginning of April 2016, the Australian central bank became upset by what seemed to be an upturn in the value of the AUD, as a stronger AUD would involve a drop in commodities prices, a rise in inflation and a slowing of economic progress. However, the trend relaxed later in the month due to the strength of the U.S. dollar, a drop in crude oil prices and investors moving away from AUD in favor of the Japanese yen.

RELATED TERMS
  1. AUD (Australian Dollar)

    The currency abbreviation for the Australian dollar (AUD), the ...
  2. Aussie

    Slang term that is used to refer to the Australian dollar.
  3. AUD/USD (Australian Dollar/U.S. ...

    The abbreviation for the Australian dollar and U.S. dollar (AUD/USD) ...
  4. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island ...
  5. Dollar Rate

    The exchange rate of a currency against the U.S. dollar (USD). ...
  6. Banknote

    A negotiable promissory note issued by a bank and payable to ...
Related Articles
  1. Trading

    Top 6 Most Tradable Currencies

    Here are six currencies that can diversify your portfolio.
  2. ETFs & Mutual Funds

    3 Australian Mutual Funds to Avoid

    Learn about several catalysts that may have a negative effect on the Australian economy. Discover three mutual funds to avoid in 2016.
  3. ETFs & Mutual Funds

    The Top 3 ETFs For Investing in Australia

    Learn about some of the best performing exchange-traded funds that investors use to obtain exposure to stock investments in Australia.
  4. Markets

    Will the Yuan Become an International Reserve Currency?

    Although still a matter of when, China is likely to reach a significant milestone when the International Monetary Fund decides to include the Chinese yuan in its special drawing rights basket ...
  5. Markets

    Why Hedge Funds Are Shorting Australian Banks (CMWAY, WBK)

    Discover why hedge funds are shorting Australian banks, including key themes such as an overheated property market, bad debts and declining earnings.
  6. Markets

    Why Countries Keep Reserve Currency

    Central banks and financial institutions hold large amounts of foreign money as their reserve currency.
  7. Trading

    How Are International Exchange Rates Set?

    International exchange rates show how much one unit of a currency can be exchanged for another currency.
  8. Trading

    How 2016 Could Be A Disaster for These Currencies

    Tanking oil prices, slowing BRIC growth, and general instability do not bode well for these currencies.
  9. ETFs & Mutual Funds

    USDU: WisdomTree Bloomberg US Dllr Bullish ETF

    Explore an analysis of information on the WisdomTree Bloomberg U.S. Dollar Bullish Fund, a currency ETF that tracks the overall performance of the U.S. dollar.
  10. Markets

    How Currency Works

    Currency offers key advantages over economies based on direct trade. It provides sellers with a broader market for their goods and services, and provides a durable asset with which people can ...
RELATED FAQS
  1. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
  2. Is there a world currency? If so, what is it?

    There is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Answer >>
  3. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

    The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is ... Read Answer >>
  4. How are foreign exchange rates affected by commodity price fluctuations?

    In the foreign exchange (forex) market, currency valuations move up and down as a result of many factors, including interest ... Read Answer >>
  5. How often do exchange rates fluctuate?

    Exchange rates float freely against one another, which means they are in constant fluctuation. Currency valuations are determined ... Read Answer >>
  6. What is foreign exchange?

    Foreign exchange, or Forex, is the conversion of one country's currency into that of another. In a free economy, a country's ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center