500 Dollars – Australia

In 2020, Australia's currency situation was dominated by the profound economic shock of the COVID-19 pandemic. The Australian dollar (AUD) experienced extreme volatility, plunging to a near 18-year low of approximately US$0.55 in March during the peak of global market panic. This "risk-off" sentiment saw investors flee to safe-haven assets like the US dollar, while Australia's exposure to Chinese demand and commodities made the AUD particularly vulnerable. Concurrently, the Reserve Bank of Australia (RBA) implemented emergency monetary policy, cutting the official cash rate to a historic low of 0.10% and launching a quantitative easing program for the first time to lower funding costs and support the economy.

The currency's trajectory, however, reversed sharply from its March lows, beginning a sustained recovery for the remainder of the year. This rebound was driven by several key factors: a faster-than-expected containment of the virus within Australia, leading to a reopening of the domestic economy; a surge in global demand for iron ore, Australia's largest export, buoyed by Chinese stimulus; and a broader weakening of the US dollar as global investor sentiment improved. By year's end, the AUD had remarkably rallied to trade around US$0.77, reflecting a "risk-on" environment and the relative resilience of Australia's economic position and trade terms.

Throughout this period, the RBA maintained a cautious stance on the currency's strength, repeatedly noting that a lower exchange rate would be beneficial for the economic recovery. While not directly intervening in the forex market, the bank's persistent dovish guidance and yield curve control aimed at keeping three-year government bond yields at 0.10% helped to cap significant upward pressure on the AUD. Thus, the year encapsulated a dramatic journey for the currency—from a crisis-driven collapse to a commodity-fueled recovery—all under the shadow of unprecedented monetary policy support.