The Australian dollar has soared to a new 28-year high approaching 111 U.S. cents amid increasing expectations of an interest rate rise and continuing dispute over the U.S. government debt.
The local currency has been rising steadily in recent months, driven by strong commodity prices. The Australian dollar has been helped in recent weeks by a weak U.S. currency as fears grow that the U.S. government could default on its debts.
But what pushed the Australian dollar to the new record was the higher than expected inflation figures released on Wednesday. The consumer price index rose 0.9 percent in Australia in the June quarter for an annual inflation rate of 3.6 percent, the fastest pace of inflation since late 2008.
The Australian dollar was trading at 109.60 just prior to the data release then quickly rose to 110.62 cents, its highest level since the government allowed the currency to trade freely in December 1983.
The currency reached 100 U.S. cents on Oct. 15 last year, the first time it has hit parity with the greenback since it was floated.
Reprinted in part from WoolNews.net