16 Oct 2010

Australian dollar hits parity with greenback

4:16 pm on 16 October 2010

The Australian dollar has hit parity with the US dollar for the first time since it was floated in 1983.

The last time parity was seriously discussed as a possibility was in 2008, before the Lehmann Brothers crash, when the Australian dollar hit 98.5c US.

As the global financial crisis unfolded, it fell to 60 cents.

It briefly rose to 1.0003 US cents just before 11.30pm (AEDT) on Friday before pulling back to 99.69 US cents at about midnight.

The ABC reports the dollar has been rallying in recent months because of growing expectations that the US Federal Reserve will pump more cash into the US economy.

That has been weakening the US dollar and sending the Australian dollar to its new high.

The greenback is already trading at parity with the Canadian dollar.

The BBC reports investors are also attracted to the Australian dollar by relatively high interest rates there.

Analysts say the rise could ease pressure on the Reserve Bank of Australia to lift interest rates. The official cash rate is currently 4.5%.