AUD – Australian Dollar
Although the Australian Dollar is only ranked as the 5th most relied upon and popular choice of reserve currency for investment purposes, it would seem that this currency has consistently managed to attract a sizeable amount of investors by virtue of a number of different variables.
With high interest rates, a sound economic system and infrastructure which has been able to avoid the worst effects of the global recession and a relaxed tax regime have all proven to be a winning combination for foreign investment opportunities.
Indeed, the Australian Dollar is oftentimes recommended by investment experts and financial advisors as an excellent way to both diversify an investment portfolio as well as hedging against losses endured by other investment options.
As nations across the world steeled themselves for the introduction of the decimalisation system alongside the teething problems that such a radical transition process would undoubtedly bring, it would seem that in true Australian spirit that there was a degree of humour to the proceedings.
This was reflected in the fact that at that time, there was a great deal of controversy and debate as to what exactly would be the official name for the newly minted currency and so names such as the kanga and the roo were proposed. The then Prime Minister, Sir Robert Menzies, himself a staunch royalist and advocate for the monarchical system had tentatively suggested that the term royal should be used and adopted for the new currency.
However, according to historical sources, this proposal turned out to be so widely unpopular with the general public and the population at large that the Reserve Bank of Australia made the unilateral and executive decision of withdrawing the currency that bore the name “royal” and then proceeded to destroy it.
The Australian Dollar as we know it today came into existence in 1966 and it was introduced in order to provide a decimalised version of the Australian Pound currency which many felt was too complicated, ungainly and tedious to handle.
When the Australian Dollar came into existence it was already closely regulated and strictly controlled by virtue of the Bretton Woods system which was an international currency value agreement which had been drafted in America. This system continued to dictate the terms and value of the Australian Dollar until the 1980s when it was finally decided that the value of the Australian Dollar would no longer be fixed at an artificial rate but rather, be determined by virtue of the ebbs and flow of the global economy.
Whereas other nations across the world have endured a sharp decline in their economic prosperity, the Australian Dollar has never done so well and this is reflected in the fact that in 2011, the value of the Australian Dollar was set at $1.0655to 1 US Dollar.
Although the history of the Australian Dollar has been a fairly stable and controlled one, the decision to float the Australian Dollar proved to very serious consequences indeed in 2001 when the value of the Australian Dollar had plummeted to rock bottom. Valued at a mere 47.57 cents to 1 US Dollar, many predicted that this would effectively spell the death note of the nation.
The Australian Dollar has never been classified or considered a reserve currency in the traditional or conventional sense of the term and it has only been as a consequence of the economic instability and turbulence that has been endured and recorded in recent times that has driven investors to then take refuge and solace in the Australian Dollar. Whether or not the Australian Dollar will assume the mantle of number one reserve currency remains to be seen.
Read More about forex here