Aussie dollar should stay strong

The Australian dollar his risen to a 23 year record of US90.3 cents and it is expected to remain high as the movement has been driven by long-term investors. Investors are taking advantage of the wider differential between Australian and US interest rates that have existed since the credit squeeze began in August but short-term speculative flows have been below the levels seen in the year before. The spread between the two currencies is at 175 basis points but this is expected to widen if an expected 25 basis point rise takes the official Australian cash rate to 6.75 per cent and another cut in the US takes their rate to 4.5 per cent.

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