Nauru does not have its own currency, but uses the Australian dollar. By doing so, it gains the advantages of
|Exchange rates: Nauru|
|Australian dollars per US$|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
allying its economy with a stronger, larger neighbor. As Australia is Nauru's largest trading partner, using the Australian dollar simplifies trade because currencies do not need to be converted. On the other hand, Nauru's monetary policy is linked to changes in the Australian dollar, which has dramatically depreciated (decreased in value) against the U.S. dollar over the past several years. Inflation in Nauru has generally been quite low.