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Aussie dollar seen at $US1 - Coffee Break - 07-23-2007 05:50 AM
Aussie dollar seen at $US1
By Nicki Bourlioufas and wires
July 23, 2007 12:21pm
THE Australian dollar could reach parity against the US dollar and is expected to strike US90 cents in the short term, according to a economic key forecaster.
Craig James, chief economist with CommSec, said today the dollar was expected to reach US90 cents in the near term. After that, the currency could hit $US1, giving Australians who are travelling abroad a big financial boost.
With a strong economy and rising commodity prices and the risk that interest rates could keep rising locally, "we expect to see the Australian dollar will reach US90 cents and after that, we will have to see," he told ABC Radio.
"But we could see the Australian dollar up in the high US90s and perhaps at parity," he said.
Indeed, other analysts are predicting parity could be reached with a continued decline in the UD dollar.
At 12.12pm, the dollar was quoted at $US0.8810.
The dollar hit another 18-year high during weekend trading, but still opened marginally weaker today from Friday's close as US equity markets posted declines.
Uncertainty about the upcoming Japanese upper house elections has encouraged carry traders to sell the currency.
At 7am AEST, the dollar was trading at $US0.8799/03, down from Friday's close of $US0.8805/10.
In offshore weekend trade, the currency it traded between a low of $US0.8760 and a high of 0.8834, its highest level since February 14, 1989, when it touched $US0.8892.
Bank of New Zealand currency strategist Danica Hampton said the dollar reached its high at the weekend after continuing worries about the US sub-prime mortgage market, involving loans to borrowers with poor credit histories, caused the US dollar to weaken.
"There wasn't any fresh reason for the selling (of the US dollar)," Ms Hampton said.
But a small fall in US equities sparked carry traders, who normally sell the low-yielding Japanese yen for riskier, higher interest rate currencies, to offload their holdings of the dollar.
The Dow Jones index fell 1.07 per cent to 13,851.08 at the close of trade on Friday night while the S&P index fell 1.22 per cent to 1534.10.
The dollar is expected to trade within a tight range today, with foreign exchange traders holding their positions until the release on Wednesday of consumer price index data for the June quarter.
News Limited