You’ve probably heard about the Australian dollar and wondered what it is. It’s the currency of Australia, but do you know its full form? In fact, the currency’s full name is “Aussie Dollar” and is abbreviated as “AUD.” Here’s a breakdown of the Australian dollar’s composition. Despite being the 5th most widely traded currency in the world, the Australian dollar is widely used in carry trades with the Japanese Yen. Carry trades involve selling one currency with a lower interest rate and buying another with a higher interest rate.
The Australian dollar is the official currency of Australia and several independent Pacific Island nations. It is subdivided into 100 cents. This currency is used to measure prices in the Australian market. In addition to Australia, it is officially used in Papua New Guinea, Kiribati, and Nauru. To help you better understand this currency, let’s start by learning its full form. In this article, you’ll discover what “AUD” stands for and what it means in Currencies and the Regional field.
The Australian dollar has experienced a rapid depreciation in recent years, leading to an excessive level of volatility in its exchange rate. Some commentators argued that Australia should devalue its currency. To counter this, the Australian National Bank decided to cap the value of the Australian dollar in September 2011 and introduced a monetary policy framework that is less inflation-targeted. This change in the Australian dollar has been welcomed by the market.
The interest rate differential has a positive impact on the Australian dollar, as it is an important factor for capital flows. However, it is not the only factor in determining the Australian dollar. The Reserve Bank’s Term Funding Facility is another important source of ultra-cheap commercial bank funding, which contributes to the rising Australian dollar. As long as the Reserve Bank continues to keep interest rates low and the currency floating, the Australian dollar may be susceptible to appreciation or depreciation. That’s all that you need to know about Australian dollar. I have covered almost all the info and details.