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 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.
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.
- 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
- 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?
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|
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
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.