Aussie tipped to reach $US1.10

THE soaring Aussie dollar hit a new high yesterday of $US1.05 with predictions $US1.10 is not far away.

A growing jobs market and the minerals boom is pushing the dollar to heights not experienced since the currency was floated in 1983; great news for shoppers and overseas travellers but a heavy burden for exporters.

The dollar is also strong against the pound and the euro, buying over 64p and 73 euro cents respectively.

Economists say Asia's demand for Australian commodities will continue to underpin the strength of the dollar and it could soon hit $US1.10.

AMP chief economist Shane Oliver said he expected the next milestone could be reached before the end of the year.


He said the rising dollar was good news for Australian families as it took pressure off interest rates, made overseas holidays cheaper and would drive down the prices of imports such as cars, clothing and electronic goods.

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The strong dollar also had the bonus of keeping petrol prices down, with Mr Oliver estimating they would now be 15c a litre higher without the strong Aussie.

"It does boost the living standards of Australians because they can afford to buy more overseas," he said.

"It's not so good for Australian companies competing internationally."

Australian Retailers Association executive director Russell Zimmerman said the news was not so bright for retailers, who were likely to make less of a profit per item and feared losing even more customers to online shopping. "They are going to have to provide absolute top service to make sure that when they are giving that service people are assured they are getting really good value for money," he said.

He said prices at checkouts would drop as the cost of imported goods fell but it would take a minimum of six weeks before shoppers really noticed a difference because it would only start to affect stock that had not been ordered yet.

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