The A$ continues to charge towards US parity (US$1), temporarily breaking through the 98US¢ barrier this week, as further US financial and economic gloom added to an already weakening US currency. While the A$ traded as high as 98.5US¢ on Wednesday, it finished Thursday trading at 97.8US¢ - up 12% year-on-year.
Some major Australian banks are now forecasting the A$ to reach and exceed parity through the second half of 2008 and early 2009. The strong outlook for the A$ will place further pressure upon Australian red meat exporters, who have seen recent price gains in export markets, particularly in the US, erased by the stronger A$.
While Australia’s comparatively strong economy, assisted by the commodity boom, has helped to underpin the appreciation of the A$, the surge in value in recent months has been essentially caused by the weakness of the US currency. Against the European euro and Japanese yen, the A$ finished Thursday trading 3% and 4%, respectively, below the same period last year.