Forex: Australian Dollar hits new 29-year high

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The Australian Dollar peaked at a new 29-year high against the US Dollar early Wednesday morning in the Asian Session to reach 1.0306. This is a gain of over 6 cents pips since the March 17th low of 0.9704. This is the highest level the Australian Dollar has reached since the currency was floated in 1983. Against the Japanese yen, AUD hit 85.70 breaking the 10-month high.

Australia has one of the highest yields amongst developed economies, with the official rate at 4.75%, making it a very attractive currency.

The main reason for the rise in the Australian Dollar has been an increase in risk appetite. The rise in the Aussie Dollar is correlated also to the rise in the Australian stock market. The impact of two natural disasters in the country earlier in the year prompted buy signals for the currency, as investors were confident that capital will flow back in. Also bullish sentiment that economic growth will pick up globally helped boost demand, despite the unrest in the Middle East and the disaster in Japan.