Interpac Business and Migration Solutions Melbourne Australia

(November 3, 2010)

The Australian dollar reached a post-float, 28-year high overnight, pushing above parity with the US dollar for the second time in a month.

The record high came after the Reserve Bank of Australia raised the cash rate to 4.75 per cent yesterday afternoon.

By about 6.30 eastern daylight time this morning, the local unit was trading at 99.89 US cents - but it had come back after a record-breaking performance in offshore trade, twice nudging above parity during the New York session.

Bank of New Zealand currency strategist Mike Jones said the Australian dollar reached 100.25 US cents just after midnight following the RBA's surprise interest rate rise.

It comes ahead ahead of likely quantitative easing in the US, expected to follow the US Federal Reserve's Open Market Committee meeting.

Experts believe the US central bank will announce it will spend $500 billion between now and early next year buying up US assets. If that cash injection proceeds as expected, it will undermine for value of the US dollar and that will in turn push the Australian dollar even higher.

A strong greenback means weakness for the Aussie - and vice versa.

"The Aussie hit a 28 year post-float high overnight," Mr Jones said from Wellington.

"The RBA rate hike provided the impetuous to get the Aussie over the line.

"The first time the Aussie got above parity, it quickly erased those gains, but this time the Aussie seems to be on a much surer footing, so we'll probably see it around the parity mark for longer."

Mr Jones said the Australian dollar had been assisted by US dollar weakness.

He expected the local currency to trade around parity during the domestic session.

The local unit also hit parity with the US dollar three weeks ago. This morning, it was also buying 80.58 yen and 71.14 euro cents.

(Source:theage.com.au)