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The value of the Australian dollar goes up and down daily. We look at the reasons why

Sophie Elsworth, October 15, 2018 11:42AM News Corp Australia Network

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Understanding how the Australian dollar gets its value can help your saving and spending patterns. media_cameraUnderstanding how the Australian dollar gets its value can help your saving and spending patterns.

money

Reading level: green

You will often hear people saying that the value of the Australian dollar is up or down. But what does this mean and does it affect kids’ lives?

The short answer is yes, it does affect kids, and their parents, and the amount of everything we buy or sell.

Here, is a short explainer on how the Australian dollar is valued.

The Australian dollar goes up and down on a daily basis. media_cameraThe Australian dollar goes up and down on a daily basis.

THE AUSSIE DOLLAR
Australia’s currency is the Australian dollar and its value is very important.

It constantly moves up and down and it can impact the cost of goods and services* that we buy.

It is the fifth most traded* currency* in the world behind the US dollar, the Euro, Japanese yen and the British pound.

This means these currencies are constantly going through people’s hands for purchases all the time.

This is because Australia does a lot of trading outside of Australia, often at all hours of the day and night.

The value of the dollar changes all the time and has been known in the past few decades to be unpredictable*.

The value of one Australian dollar ($A1) has gone from being worth about 50 US cents or up to $US1.10.

When the prices of important assets such as iron and coal go up the value of the Australian dollar also goes up.

Other important commodities (a raw material or valuable thing) include gold, oil and natural gas, but if the prices of these important commodities go down the value of the Australian dollar goes down.

This is important because if you buy something such as a Nintendo online from the United States, if the value of the Australian dollar is lower against the US dollar it means you will need to spend more money to make the purchase.

If a Nintendo costs $US100 and the Australian dollar is worth 70 US cents, it will cost about $142 in Australian dollars

That is $US100 dollars divided by 0.70 cents equals $A142.

100 Australian dollars does not always equal 100 US dollars. media_camera100 Australian dollars does not always equal 100 US dollars.

This also impacts Australians when they travel overseas.

If the value of the Australian dollar has fallen then it becomes more expensive to exchange money into another country’s currency (such as the British pound).

So when Australians travel overseas they often watch the currency exchange rates* closely to see how much value they can get for each Australian dollar they exchange.

GLOSSARY

  • goods: objects people want that they can touch or hold
  • services: actions or jobs that a person does for someone else
  • traded: bought or sold goods or services
  • currency: money
  • unpredictable: not something you can predict
  • exchange rates: the value of one currency converted to another currency

LISTEN TO TODAY’S STORY

QUICK QUIZ

  • What is the second most traded currency in the world?
  • When does Australia do most of its trading?
  • If the price of iron goes up, what happens to the Australian dollar?
  • If the value of gold changes, what happens to the Australian dollar?
  • What is an exchange rate?

CLASSROOM ACTIVITIES
1. Exchange rates
Using the information from the article on how to convert the Australian dollar into different currencies, see if you can convert the Australian dollar amounts below into the different world currencies. AUD equals Australian dollars.

CURRENCY EXCHANGE RATE (Oct 9) AMOUNT CONVERSION RATES
USD: United States dollars .70 $100 AUD 100 x .70 = $70 USD
Japanese yen 80.17 $100 AUD  
British pound 0.54 $100 AUD  
European Euro 0.61 $100 AUD  
Indonesian rupiah 10798 $100 AUD  
Thai baht 23.32 $100 AUD  

2. Extension
Have you used any of these different currencies on holidays overseas? What’s the advantages and disadvantages of buying things in different currencies?

Time: Allow 30 minutes to complete this task.
Curriculum links: Mathematics

VCOP ACTIVITY
After reading the article, with a partner, highlight as many pieces of punctuation as you can find in green. Discuss how these are being used, where and how often. What level of the punctuation pyramid is the journalist using in this article?

HAVE YOUR SAY: Have you been given money from another country? What is the currency called and which country is it from?
No one-word answers. Use full sentences to explain your thinking.

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