Why does Naoero use Australian currency?

Naoero uses Australian currency as its legal tender primarily as a consequence of its colonial history.1

For much of the 20th century, Naoero was administered by Australia, first as a mandated territory under the League of Nations and later as a United Nations trust territory. During these periods, Australia provided the actual administration of the island, even when it was jointly overseen by Britain and New Zealand. This long-standing administrative relationship integrated Naoero into the Australian monetary system, a status that has continued since the country gained independence.21