It's a coin that brings new meaning to the phrase "less is more."

Featuring an aperture where its middle used to be, this "holey dollar" is expected to sell for $350,000 at auction later this month.

Making its public auction debut, the 1813 coin once belonged to one of NSW's first governors, Lachlan Macquarie, and is valued so highly because of its fine condition, historical value and rarity.

Only 300 holey dollars exist worldwide, with half of those residing in public collections.

"It's a coin we've been waiting to handle on the market for some time. It's never been in auction before," said Noble Numismatics managing director Jim Noble.

He said the coin could attract a number of interested parties, given its value and significance.

"It could be a museum, it could be a private collector. It's of great historical significance," said Mr Noble, who noted that the Macquarie Bank symbol features a holey dollar.

In 2012, a holey dollar sold for $410,000 at auction – and was later stolen from the State Library of NSW. In 2011, another sold for $485,000.

Governor Macquarie gave this particular coin to an associate as a gift. It has moved through numerous private collections after it was discovered in Scotland decades ago.

The holey dollar came about in the early years of European colonisation of Australia. People used British, Dutch, and Indian coins as currency, which would leave on trade ships, removing them from Australian circulation.

To counter this, Governor Macquarie had the centre punched out of £10,000 of Spanish currency to form two new coins. One was made from the centre – called the "dump" – and another from the surrounding ring, which came to be called the "holey dollar". Each new coin was restruck​ with the NSW insignia.

The outer ring was valued at five shillings, while the central dump was worth 15 pence. The punching and restriking​ was done by emancipated convict William Henshall, who by virtue of his experience in metalwork – and crimes of forgery and counterfeiting – was a particularly fine minter.

The coins were eventually removed from circulation, sent to England and melted down into bullion.

There are numerous reports of holey dollars turning up in odd places, including in ploughed fields and in use as a tap washer. A holey dollar found on the bank of the Shoalhaven River sold for $60,000 in 1995.

The coin, and other significant historical items, will be auctioned at the State Library of NSW from July 28-30.