Will Australia Raise Interest Rates?

The Australian dollar, together with its New Zealand counterpart are among the best performing currencies in foreign-exchange markets in 2009 after evidences pointed the resilience of South Pacific countries to recover from the crisis, attracting worldwide investors to the region.

This was the second week straight of gains for the Australian dollar versus the greenback and most of the 16 main traded currencies after Reserve Bank of Australia Governor Glenn Stevens suggested that borrowing costs in the country may be subject to elevations towards the end of the year, attracting traders to inject money in the country, since higher interest rates provide higher profit possibilities for investors. New Zealand is likely to be the second country to raise interest rates among the wealthiest nations in the world, adding attractiveness for the South Pacific region, which has also benefited from a higher demand for raw materials as the global economy improves, taking into account that most of Australian exports are commodities to China.

After the declarations coming from the central bank in Australia the Aussie found support to remain at high level, and even with a corrective movement towards the end of this week’s session, most of analysts bet in a strong Australian dollar towards the end of the year.

AUD/USD closed the week at 0.9162 after hitting the highest level in more than a year during the week at 0.9270.