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The Australian dollar is currently the sixth most-traded currency in world foreign exchange markets (behind the US dollar, yenNatsume Soseki. New yen notes will enter circulation, replacing these, on November 1, 2004. Yen is the currency used in Japan. In Japanese it is usually pronounced "en", but the pronunciation "yen" is standard in English. The ISO 4217 codes for the yen ar, euroThe euro ISO 4217 code EUR is the currency of twelve of the twenty-five nations that form the European Union (and four outside it, as well as Montenegro and Kosovo), which form the Economic and Monetary Union (EMU). It is the result of the most significan, British pound and Swiss franc) accounting for approximately 4-5% of worldwide forex transactions. The Australian dollar is popular with currency traders due to the lack of government intervention in the exchange rate and higher interest rates than comparable economies.

1 Overview

Each Australian dollar is composed of 100 centEuro coin In currency, the cent is a monetary unit that equals th of the basic unit of value. It also refers to the coin which values one cent. Etymologically, it comes from the Latin word centum which means hundred. Mints all over the world usually creats. The smallest coin in current circulation is equal to five cents, the one and two cent coins having been discontinued in 1990-92 and withdrawn from circulation.

The Australian dollar was introduced in 1966Events January January 1 In a coup, Colonel Jean-Bedel Bokassa ousts president David Dacko and takes over the Central African Republic. January 2 Strike of public transportation workers in New York City ends January 13 January 3 First Acid Test at the Fil, not only replacing the Australian poundThe Australian pound was Australia's currency from 1910 to 1966. It was first introduced by the Labor Government of Prime Minister Andrew Fisher, consisting of twenty shillings which consisted of twelve pence each. The Australian pound was on the Gold Sta (long since distinct from the Pound Sterling) but also introducing a decimal system. The Australian Prime Minister Robert Menzies wished to name the currency "the Royal", and other names such as "the Austral" and "the Koala" were also proposed.

Due to Menzies' influence, the name "Royal" was settled upon, and trial designs were prepared and printed by the printing works of the Reserve Bank of Australia. The unusual choice of name for the currency proved unpopular, and it was later shelved in favour of "Dollar".

On February 14 1966 the Australian Dollar was introduced at a rate of two dollars per pound, or ten shillings per dollar.

All Australian notes are issued by the Reserve Bank of Australia. Australian coins are produced by the Royal Australian Mint.

2 Monetary history

In 1910 an Australian currency was first introduced by the Labor Government of Prime Minister Andrew Fisher - the Australian pound consisting of twenty shillings each consisting of twelve pence. The Australian pound was on the Gold Standard and was equal in value to pound sterling. Prior to this, pound sterling was used in conjunction with banknotes and bills of credit issued by private banks. Coins were first introduced in 1910; Commonwealth Bank notes followed soon after.

In 1919 the pound sterling was removed from the gold standard. When it was returned to the gold standard in 1926 the chosen gold price unleashed deflationary pressures.

In January 1931 the Labor Government of Prime Minister James Scullin devalued the Australian pound by 25 per cent against pound sterling as an emergency measure during the Great Depression. £1 sterling became worth £1 5s. 0d. Australian (AUD$2.50). While this devaluation no doubt removed some of the deflationary pressures introduced five years earlier it would still have been disruptive.

In 1948 when the United Kingdom Government devalued the pound sterling against the US dollar, Australian Prime Minister and Treasurer Ben Chifley followed suit so the Australian pound would not become over-valued in sterling zone countries, with which Australia did the most trade at the time. One Australian pound went from US$2.80 to US$2.24.

On February 14, 1966, a decimal currency, known as the Australian dollar, was introduced after years of planning. £1 became $2, ten shillings became $1, and one shilling became ten cents. Amounts less than a shilling were converted thus:

In 1966 following the introduction of the Australian dollar the value of the national currency continued to be managed in accord with the Bretton Woods gold standard as it had been since 1944. Essentially the value of the Australian dollar was managed with reference to the value of gold, although in practice the US dollar was used.

In keeping with Australia's move to a metric system the value of the new Australian dollar was equivalent to one gram of gold.

In 1971 the US government discontinued the practice of managing the value of the US dollar with relation to the value of gold and from this point onward Australia slowly loosened its usage of US dollar as a means of measuring value. However for more than a decade it continued to peg to the US dollar using a moving peg.

In 1983 the Australian government "floated" the Australian dollar, meaning that it no longer managed its value by reference to the US dollar or any other foreign currency. Today the value of the Australian dollar is managed with almost exclusive reference to domestic measures of value such as the CPI (Consumer Price Index).

In 2001, the value of one Australian dollar went below 50 US cents for the first time. As of May 2004, the Australian dollar is worth about 70 US cents. In 1966 the Australian dollar was worth about 980 milligrams of gold. As of May, 2004, the Australian dollar is worth 58 milligrams of gold.

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