Forecasts for A$ to Stay High in 2011

In unwelcome but probably not surprising news for Australian red meat exporters, the Australian dollar (A$) is forecast to stay above 90US¢ throughout the rest of 2010 and 2011, according to a recently released report from Australia's Access Economics.

Demand for Australian resources, the relative strength of the economy and higher interest rates were all cited as factors as to why the A$ would continue to be highly sought after globally. The report also pointed to the weakness in the US$, which depreciated against most trading partners recently upon news that the U.S. Central Bank is due to begin a fresh round of spending - signaling underlying weakness in the economy.

However, Access Economics also commented that the A$ was unlikely to go far beyond parity with the US$ and may have already peaked, briefly touching 100.04US¢ earlier this month. For the past month, the A$ has averaged 98US¢ - 8-percent above the corresponding period last year.

Most of Australia's big banks agree with this sentiment, forecasting the A$ to trade between 92-105US¢ for the 2011 year.

Reprinted in part from Meat & Livestock Australia