The Australian dollar/dollar is the fourth-most traded currency, but it is not among the six currencies making up the US Dollar Index (USDX). Currency Pair Australian Dollar (AUD) US Dollar (USD) The Australian dollar (AUD) US dollar (USD) is one of the most widely traded pairs in the Forex markets. The Australian dollar, generally called The Australian by currency traders, is popular among currency traders due to Australias relatively high interest rates, relative freedom of foreign exchange markets from government interference there, and general stability of Australias economy and political system.
The Australian dollar has gained in popularity over recent years as it generally has higher yields than many other currencies in developed markets, making it appealing for traders looking for returns. Historically, the Australian dollar has been a top candidate for carry trading currencies, as the Reserve Bank of Australia generally maintains higher interest rates than those in other developed countries. In addition, the AUDs generally higher interest rates are frequently sought for use in carry trades against other global currencies.
If Australian interest rates rise in relation to US, European, or Japanese interest rates, Australian assets paying interest, such as government bonds, are made more attractive to foreign investors, as well as Australian investors who might be investing abroad. When Australian interest rates fall, relative to interest rates in other advanced economies, Australian assets become less attractive to foreign investors and Australian investors. While the interest rate differential is a significant driver of capital flows and the Australian dollar, other factors matter for investors in making decisions about where to allocate investments, such as the risks of investing in Australia compared with other economies.
Generally speaking, if you are buying U.S. dollars with Australian dollars, it is a good thing that the AUD/USD exchange rate is higher. The easiest way to check AUD/USD exchange rates is using our real time currency converter or a trusted online currency convertor. It is worth knowing that mid-market rates for AUD/USD are not always available at your usual bank or exchange. Choose a provider who uses a mid-market rate of the AUD/USD exchange rate, and charges a low, transparent exchange rate to ensure that you are getting a better overall rate on your currency exchange.
Understanding the rate spectrum of your currency pairs can help you to convert currencies when the rates are best for you. Unfortunately, nobody can tell you when it is best to exchange your Australian dollar for your US dollar, but you can keep an eye on the rates. The currency rates provided are only indicative, as of the time and date shown, are subject to market movements, and so are constantly changing.
The currency exchange rates graph is an interesting one to look at as it tends to negatively correlate with other large currency pairs including the US$/CAD, US$/JPY, and US$/CHF. The main cause for depreciation is the old truth that a higher rate of inflation will keep depreciating any currency; Indias inflation rate, as with most emerging economies, has been higher than that of US dollars. The downside to these periodic AUD/USD depreciation episodes is that when global financial markets are at their happy (or risk-on) places, and optimism for the outlook for the world economy is running high, AUD usually performs better. Whenever the world goes risk-off and investors withdraw to the safety of their home countries, the AUD tends to suffer, just as the dollar tends to benefit from its safe-haven characteristics as the worlds leading reserve currency.
When the Federal Reserve steps in with an intervention to weaken the U.S. dollar, for instance, the AUD/USD pairs value can rise. While the Australian dollar offers only a marginally better return compared with the dollar, the AUD/USD pair remains a tool for investors who are interested in running carry trades. Although the COVID-19 pandemic has adversely affected economies worldwide, the AUD/USD currency pair continues to remain a viable carry-trade alternative. While historically lower in these values because of the COVID-19 pandemic, interest rates for AUD remain slightly higher than for USD.
Rates had been rising steadily since this November, meaning that you were heading towards getting more USD for your Australian dollars. For instance, on 7 May 2020, the cash rate of the Australian dollar was 0.25 per cent, whereas the U.S. Federal Reserve had set the rate at 0.0 per cent over the U.S. dollar. On 9 September 1973, the peg was adjusted to $1.4875, with the swing limit changed to $1.485-1.490 USD; On both 7 December 1973 and 10 December 1973, New Yorks midday purchase price of wire transfers paid in foreign currencies reached a maximum of $1.4885 USD per dollar. In December 1983, the Australian Labor Government led by Prime Minister Bob Hawke and Treasurer Paul Keating floating the dollar, the exchange rate reflecting balance of payments and demand and supply on the international money markets.
Prior to its introduction, the currency of Australia was the British sterling, which was a pre-decimal currency. The AUD/USD, the Aussie, pair tells the trader how many U.S. dollars (the quoted currency) are needed to buy one Australian dollar (the base currency). In this instance, Australian dollars are considered as base currency, while US dollars (abbreviated as dollars) are considered as the quote currency, or the denomination of which a quote is given. However, the differences in the interest rates in Australian and American economies may have made the commodities market a highly liquid market — providing opportunities for short-term trading as well.