$A to six-month high

Beef Central, 06/02/2012

The Australian dollar has climbed to US 107.6c/kg, its highest point in six months, with increasing flows of speculative investment considered a key reason for its rapid climb this year, according to financial media. 

Weekend rises have taken the dollar past recent peaks of  US 1.07 on October 27 last year and US 1.072 on September 1. This morning's level is the highest point since the $A briefly peaked above US 110c in late July 2011.

The $A has now gained almost 10c since just before Christmas.

The rapid rate of rises recorded so far this year has surprised analysts, according to financial media reports, defying their models of fair value for the $A.

Bloomberg News said reports of greater-then-expected jobs growth in the US in January had boosted the global appetite for risky assets and sparked new flows of investment towards our dollar.

Citigroup foreign exchange strategist Todd Elmer said the Australian dollar had become an increasingly attractive investment in a world where the major currencies of the US, Europe, Britain and Japan all have problems.

In a prediction many in the Australian beef industry will hope is off track, he told The Australian this morning that if the world’s central banks follow the speculators by also increasing investment in the $A, our currency could rise past US 120c.

However Westpac’s financial exports said there had been little evidence of foreign central banks buying Australian dollars in recent months.

A recent poll of 50 analysts around the world by Reuters found that most expect the Australian dollar to stand at around US 101c by the end of the year. 


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