The Australian dollar is one of the most traded currencies in the world, and one of the most volatile. Here’s what drives it, and how its moves reach your wallet.
When people talk about the Australian dollar going up or down, they usually mean how many U.S. cents one Australian dollar buys.
Australia floated its dollar in December 1983, under the Hawke government and Treasurer Paul Keating. Since then, its value has been set by buyers and sellers in currency markets, rather than by the government. It has ranged from below 48 U.S. cents in 2001 to above US$1.10 during the mining boom in 2011. In late October 2026, it was trading at about 70 U.S. cents.
The Aussie dollar is one of the most traded currencies in the world, and it moves for a few main reasons.
Interest rates matter most. When the Reserve Bank’s cash rate is high compared with rates overseas, especially in the U.S., investors can earn more by holding Australian dollars, which pushes the currency up. Expectations of rate rises or cuts can move it before any decision is made.
Commodity prices are next. Australia is a major exporter of iron ore, coal, gas, gold and farm products, so when prices for those goods rise, demand for Australian dollars tends to rise too. That’s why it’s often called a “commodity currency”.
China, risk and your wallet
China is Australia’s largest trading partner, so news about the Chinese economy often moves the Aussie dollar. Traders also use it as a way to bet on Chinese growth.
Global mood plays a role. The Australian dollar is seen as a “risk-on” currency. When investors are confident, it tends to rise. In a crisis, money often flows to perceived safe havens, such as the U.S. dollar, Japanese yen and Swiss franc, and the Aussie falls.
For households, a stronger dollar means imported goods, overseas holidays and online shopping from overseas stores become cheaper. Petrol prices can also ease, because fuel is bought in U.S. dollars.
A weaker dollar works the other way. It makes imports and travel more expensive, but helps exporters, farmers, miners, universities and tourism operators, because what they sell becomes cheaper for overseas buyers. It also lifts the value of overseas shares held by Australian super funds when converted back into Australian dollars.
The Reserve Bank watches the dollar closely, because a sharp fall can push up inflation through more expensive imports.
