Westpac has announced that Australian dollar shall reach its peak early next year. It has become the first bank to announce that the exchange rate for the Australian dollar vs. the US dollar shall reach 1.01 by early 2009.
Westpac’s predictions are the strongest amongst all other retail banks in Australia. It also estimated that it would take 6.5% increase to move the dollar to parity. Australian Dollar’s gain had been average 12% since past 5 years. According to Global head of Westpac, Bill Evans, the Australian Dollar shall peak above its parity in March 2009. It would hit US 96 cents in December this year itself. Currently, Australian Dollar is trading at 95 cents against the US Dollar.
"In the context of regular volatility in the Australian dollar, a 6.5 per cent move from current levels would be quite unremarkable," said Mr. Evans. "For the last five years the currency has averaged a 12 per cent gain," he added.
Mr. Evans also quoted that weakening US economy is one of the major contributing factors for strengthening of Australian Dollar. Commodity prices have also boosted the strength of Australian Dollar. Prices of gold and oil had also jumped over night which led to strengthening of the currency. Moreover, the demand in prices of coal and steel would also further escalate the demand for the Australian currency.
Westpac is amongst the four major banks in Australia and has been the first bank to claim the strengthening of currency. Mr. Gibbs from ABN Amro Australia also quoted that they are expecting a good run and the market is long.
Inflation has been on rise in Australia and Reserve Bank of Australia had raised its concerns over the same. However, it left the interest rates unchanged at 7.2%. It also kept the official cash rate also on hold for the second consecutive month.
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