Australian Dollar - AUD

Since 1966 and the abandonment of the Australian Pound, the Australian Dollar (AUD) is the official currency of Australia and of its dependences ‘(Pacific and Indian Ocean isles) so as the Independent States like Tuvalu (Pacific).

When they abandoned the original indexation on the Pound sterling, the Australian Dollar indexed in a semi-floating way only on the American Dollar from 1969 and 1974, then on a currency basket (“Trade Weighted Index”) that represents the 24 first economic partners of Australia (first with a fixed exchange rate, than from 1976 with a periodic revalued rate).

The aim of this approach was to make the Australian Dollar less dependent on the fluctuations of the American Dollar. It was only in December 1983, when the Australian Dollar met up the other great currencies with a floating exchange rate regime.

In a few years, it became the 6th most negotiated currency on the exchange market (for about 7% of the currency purchases and sales made each year on the Forex, whereas Australia only represents 2% of the worldwide economy). The Australian Dollar was successful in particular thanks to the non-interventionism of the Australian government (the main work of the Reserve Bank of Australia is to curb all the inflations) and thanks to a high interest rate policy run by the same National Reserve.

This high interest rate policy is still current in 2009, whereas all the other great Central Banks sharply decreased their reference rates to favor the economic recovery. So the investors’ “carry-trade” operations (purchase of the currencies that have the strongest interest rates) are naturally on the Australian Dollar.

We must say that the Australian economy and currency depend in a large part on harvests, minerals, and farming raw material rates, as well as on the economic health of the main importer countries of Australian products – Japan and the member countries of the ASEAN (Association of South-East Asian Nations).

When the raw material prices apprise (2002-2007), the Reserve Bank of Australia will tend to increase its reference rate in order to fight inflation. The main currency cross negotiated on the Forex is the AUD/USD (Australian Dollar/ American Dollar: 0.96 in March 1984, 0.70 in April 2009).