Article by Currency Information and Research

The "Aussie" (Australian Dollar)

Australia is a highly developed country which ranks as the world’s thirteenth largest economy and it has a steady growth rate after its drop a few years back. The currency used in Australia is the Australian dollar which came into action in the early 1970’s. This currency is popular worldwide and it has created its own significance in the foreign exchange markets.

At present 1 Australian dollar = 1.0149 U.S. dollars.

When did the government of Australia impose this currency? The first currency which was issued by the Australian Reserve Bank was known as the royal. It was unpopular in the exchange markets and in 1966, the Australian Reserve Bank issued the Australian dollar with the symbol AUD, $ or A$. This currency created an impact in the exchange markets as well as the country’s growth as it passed on.

The highest valuation of this currency with the US dollar was relative during the period of the peg to the USD. However, the highest valuation was prolonged for a few years with the USD but it had a sudden drop in the year 2001.

Nevertheless , it has grown steadily from then and now it has risen to as high as 102.18 US cents. It has indeed added strength to the job markets as unemployment continued to fall. Apart from this, Australia has an inflation rate of 3.3% which is less when compared with the other countries and that’s why it stays as the fifth most traded currency in the global foreign exchange market.

What drives the investors to invest in Australian dollar?

The dollar of Australia is popular with the currency traders; this is because of the fact that the interest rates in Australia are high. This currency is commonly referred to as an “Aussie” by the foreign exchange traders. The Australian dollar’s value has reflected the market’s concern that banks would rather use loans than bonds. As the currency hits high in the market, the traders were happy to see this and looked forward to investing more as the Australian Reserve Bank is not in a hurry to impose another long interest cutting cycle.

Furthermore, the Europe’s debt crisis has kept down the rise in the Australian dollar. The European Central Bank (ECB) has announced that it has lent nearly 485 billion Euros from different banks in order to increase their capital. The traders have found that the Australian dollar fluctuates whenever there is a change in the value of the raw materials like gold, copper and aluminum.

The Australian dollar price would remain volatile for a few weeks or so and it will be exceptionally volatile in the future as well. The interest rate in Australia is around 7% and the Australian Reserve Bank has planned to increase the rates further more in the forthcoming year. So being a trader, it is the best time to invest in the Australian dollar as it has dropped 10% against the yen and has increased interest rate which can yield you a better profit.

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