History
The pataca was first introduced in Portuguese Macau and Portuguese Timor in the year 1894, but only as a unit of account for the silver Mexican dollar coins that circulated widely in the region at that time. In 1894, Macau and Portuguese Timor constituted one single administrative entity, although in the year 1896, Portuguese Timor became autonomous from Macau. In those days in Macau and East Timor, there was no single currency in circulation and trade was dominated by the silver dollar coins, not only of Mexico, but also of China, as well as the British silver trade dollars that were minted for use in Hong Kong and the Straits Settlements. In East Timor, the 2½ Gulden coin of the neighbouring Netherlands East Indies also corresponded to a silver dollar. In 1901 in Macau, it was decided to create a purely local currency and the authorities granted the Banco Nacional Ultramarino exclusive rights to print legal tender banknotes. These pataca banknotes were launched in the year 1906 at a sterling value of 2 shillings and 4 pence just like in the case of the new Straits dollar that was issued in that same year, and as in the Straits Settlements all foreign coinage was outlawed, with the view that the new currencies should establish their own market values. The Chinese were however suspicious of these paper patacas, being so accustomed to using silver for barter, and so the paper patacas always circulated at a discount in relation to the silver dollar coins. These Macau banknotes also circulated on East Timor, but in the year 1912 they were supplemented by local Timor issues for the first time. While the pataca continued at a discount to the silver dollars that were used in silver standard countries such as China and Hong Kong, the Straits dollar was pegged to sterling in a gold exchange standard and so the two currencies then floated apart. In 1935 when China and Hong Kong abandoned the silver standard, the pataca was pegged to the Portuguese escudo at a rate of 1 pataca = 5.5 escudos hence making it equivalent to the British shilling and putting it officially at a 3 pence sterling discount in relation to the Hong Kong unit, and at a 1 shilling and 4 pence discount in relation to the Straits dollar.
In 1942, during the Second World War, the pataca was replaced by Japanese issues of the Netherlands Indies gulden at par. The gulden having been on the gold standard until the 1930s had risen in value against the pataca to the extent that the pataca was now closer in value to 1 gulden rather than the 2½ gulden rate that prevailed around the start of the 20th century. When the pataca unit was reintroduced again in 1945, it was pegged to the Portuguese escudo at a rate of 5.5 escudos = 1 pataca (changed to 5 escudos = 1 pataca in 1949) and fractional coins denominated in avos were issued for the first time. In 1951, mintage of this fractional coinage ceased, yet interestingly, the following year a full set of pataca coinage including both fractional coins denominated in avos and also a pataca coin were issued in Macau.
In 1958, the pataca was replaced by the escudo at the rate of 1 pataca = 5.6 escudos.
In 1975, Portuguese Timor was invaded by Indonesia, and Indonesian currency was introduced. When this territory was established as an independent state in 2002, the US dollar was made the official currency. The US dollar was also descended from the Spanish pieces of eight but it broke parity with the silver dollars of South-east Asia and Latin America following the great international silver devaluation of 1873.
Read more about this topic: Portuguese Timorese Pataca
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