Australian dollar hits new greenback high

SYDNEY, March 30, 2011 (AFP) - The Australian dollar hit a new post-float high against the greenback on Wednesday with analysts predicting it could reach $1.10 by the end of the year.

The commodities-backed Aussie reached $1.0327 in afternoon trade, its highest since being floated in 1983, beating the previous record of $1.0315, set on Monday.

CMC Markets foreign exchange dealer Tim Waterer said a key factor helping the currency was that Australian interest rates were higher than in most other developed countries.

"That is the case of traders buying the high-yielding currencies and being short on the low-yielding currencies to earn the interest rate differential effectively," he said.

"That carry trade does seem to be resuming prominence again and whenever that carry trade is prominent in the market, that will suit the Australian dollar.

"The fairly buoyant mood on markets is behind that new high for the Aussie," he said.

Shane Oliver, chief economist and head of investment strategy at AMP Capital Investors, said the Aussie would likely remain above parity for the foreseeable future.

"Unless the global economy slides back into recession, which appears unlikely, the Australian dollar is likely to average above parity over the next few years on the back of strong commodity prices and relatively high Australian interest rates," he said. "Expect $1.10 by year end."

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