DEFINITION of 'Aussie'

Aussie is a slang term that is used to refer to the Australian dollar.

The Australian dollar is sometimes called the Aussie to distinguish it from all the other dollars, similar to how the U.S. dollar is sometimes called the greenback or the Canadian dollar is called the loonie. It is also denoted as $, A$, AU$ or AUD.

BREAKING DOWN 'Aussie'

The Australian dollar is the currency of the Commonwealth of Australia, including Norfolk Island, Christmas Island and the Cocos Islands. It is also widely used in the independent Pacific island states of Nauru, Tuvalu and Kiribati. The Tuvaluan dollar and the Kiribati dollar are pegged to the Aussie at par. The Aussie is a decimal currency, subdivided into 100 cents. Coins are minted in denominations of 5, 10, 20 and 50 cents, as well as $1 and $2. Banknotes are printed in denominations of $5, $10, $20, $50 and $100.

Australia replaced the Australian pound with the Australian dollar in 1966. After trying several forms of pegs, the Australian government floated the Aussie in 1983, allowing the currency's value to fluctuate in accordance with global supply and demand. Subsequently, the Aussie has become a reserve currency in Oceania and Asia-Pacific region. It is the sixth-most-traded currency in the world, trading at a level that is disproportionate to the size of Australia's economy.

Geology, Geography and Government Policy

The Aussie's popularity with currency traders results primarily from three factors: geology, geography and government policy. Australia's geology is rich in natural resources, including oil and gold. Its exploitation of these assets provide a strong underpinning for the nation's economy while also causing its currency to fluctuate along with changes in global commodity prices. For example, during the first quarter of 2016, the Aussie dropped to a seven-year low as a result of a steep decline in the global oil market.

The Aussie's value is heavily related to Australia's geography; the country's location makes it a major trading partner with China, as well as many fast-growing nations in the region, such as Vietnam and South Korea. Part of the Aussie's decline during this time was attributed to the decline in these nation's stock markets and currencies during 2015 and 2016.

The Aussie is also favored in currency markets because Australian government policy is widely viewed as conducive to stability in interest rates and monetary policy. In addition, the Australian government and central banks have a history of noninterventionism, and the nation has a strong rule of law and a Western approach to practicing business.

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