The Australian Dollar

Besides from the United States, there are several countries that call their official currency the dollar including Australia. To distinguish it from similarly named currencies, traders have given it the nickname the Aussie. Other smaller countries and territories such as Tuvalu and and Kiribati have also adopted this currency. Despite having the same name, it is important to note that the Australian dollar has its own unique characteristics and is completely different from its American counterpart when it comes to governance and value.

In financial markets, its accepted listing is A$ or AUD and it is currently one of the top currencies traded daily on the Forex because of traditionally having higher interest rates than the euro and US dollar. This has made it popular for use in the carry trade which involves pairing a currency like the Australian dollar with a traditionally lower yielding currency like the Japanese yen.

Australia’s central bank, whose monetary policy controls the currency, is known as the Reserve Bank of Australia or RBA. Similar to other central banks around the world, the RBA looks to keep inflation controlled at a reasonable rate of between 2% and 3% as part of its goals of maintaining price stability and encouraging economic growth in the country.

In the Forex, it is most often paired with the US dollar and is displayed as AUD/USD. Because of this, traders are always looking out for the measures taken by the US’ central bank called the Federal Reserve to get insights on how the exchange rate for the pair will move.