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Rising Australian Dollar (AUD), is it a proud moment for Australia ?

Australian Dollar  is rising at an faster rate and now it is in all time high against the US$. If we look at the chart we can see that during the end part of 2008 it had started the run and it is still going. Though at $1.00 level it has faced some resistance but now it is in the highest level. If I am right AUD was freely floated around 1983 since then this is the highest level and it may go further.

Now Euro and Japanese YEN also rise lot, but if we compare them with AUD, then we can see that AUD is far ahead of them. To some extent Japan also depends on export. so in this scenario they have lot of commons. Commodity market is big for Australia, especially the export that it does in China & other Emerging nations is rising with the increase in manufacturing and production activities in these countries. This demand of commodities also helps to push up the price of the AUD.
As moneys are coming so it will naturally push up the prices. Now due to rise in prices there will be rise in the inflation figures.

From 2009, inflation is rising. Its Producer Price Index has risen to 2.7% in January – March  this year of 2011. Now this can create pressure to hike the interest rate in coming future. Reserve Bank of Australia has not changed its interest rate since late 2010,  as such it is now at 4.75%. Australian interest rate is higher compare to the other developed countries, like Euro Zone countries, U.S. e.t.c. Now due to higher rate, some investment flows can come into Australia. So that may also be one of the cause of more rising in AUD.
This rise in Australian dollar is a cause of concern for the exporters, especially in mineral and mining industries. But they have the luxury of high commodity prices around the world. Everyone does not have that type of luxury, like travel & tourism industry, hotel industry. So it good to see for some Australian that there currency is rising against the US$  but this may be not the proud moment for all Australian people.

NOTE :  Please see the disclaimer below this blog .

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