Sunday, February 5, 2012

The Australian dollar is a safe haven

"MELBOURNE -- Australian Prime Minister Julia Gillard Wednesday warned the Aussie dollar would likely remain at a high level for years as it came to be seen as a “safe haven” amid global turmoil.
The currency has soared past parity with the greenback on the back of Australia's commodities boom and relatively high interest rates over the past two years, reaching its highest levels since it was first floated in 1983.
Gillard said as European economies suffered — with even traditional currency strongholds such as Switzerland affected — “for the first time in history Australia is being referred to as something of a global 'safe haven.'
There's another driver: investors looking to the Australian dollar as a substitute for betting directly on growth in our region — especially in China.”
The flipside was that the high currency had hurt some sectors badly, including tourism, education exports and manufacturing, she said. “The level of the dollar — and the pace of its rise — has broken some business models and forced economic restructuring.”
But she said the strong dollar was driving change and in doing so making the economy leaner and stronger."

It doesn't sound like there are any imminent plans on devaluing the AUD.

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