Trading the Australian Dollar
Australia is a major producer of raw materials, particularly base metals, and as such its currency has been boosted by increasing global demand for its products. After the Japanese yen, the Australian dollar (also referred to as the Aussie by currency traders) is arguably the most widely held currency in the Asia Pacific region, and is ranked number five in the world in terms of daily volume. In 2010 it accounted for 7 of total global FX trading volumes.
The Aussie has been around since 1967, when Australia left the sterling area following the British pound’s devaluation against the US dollar. It only became a free-trading currency in 1983, when Australian prime minister Bob Hawke cancelled its previous peg to a basket of other currencies.
Australia has an independent central bank, the Reserve Bank of Australia, which is responsible for setting interest rates. Currency analysts and economists favour Australia because of its sound monetary policy and its political stability, as well as the AUD’s correlation with resources prices.