The Australian dollar powered through 61 US cents to a three-year high yesterday after the Organisation for Economic Co-operation and Development (OECD) praised Canberra for its sound management that made Australia one of the world's best performing economies.
Even revelations that the country's current account deficit had blown to a record A$11.6bil in the December quarter mainly on the impact of a drought, weak world demand and aircraft imports failed to dampen demand for the currency.
The Aussie has gained more than 9% on the US dollar since the start of the year.
Wire agency Reuters quoted RBC Capital Markets senior economist Su-Lin Ong as saying support for the Aussie was due to higher yielding Australian bonds, a still firm domestic economy and current weakness of the US dollar.
The resilience of the Aussie confirms that there are a multitude of other key factors which are underpinning the local currency at the moment, and largely outweighing current account deficit concerns, she said.
Disappointing manufacturing data out of the United States and its weak stock markets also boosted the Australian dollar.
According to Ong, the Aussie remains on track for RBC's conservative mid-year and year-end targets of 61 and 63 cents respectively.
The Aussie momentum also carried it to a three-year high against the Japanese yen, peaking at 74.42 yen.
A policy-setting meeting of the Reserve Bank of Australia (RBA) yesterday was unlikely to result in any rate move, traders said, with the RBA seen reluctant to tinker with the official cash rate of 4.75%.
Latest projections for growth in Australias gross domestic product (GDP) range from 2.7% to 3%, falling from 3.7% in the September quarter. Nonetheless, Australia would still rank among one of the strongest economies in the western world.
The OECD report stressed that Australia was still well ahead of the average growth forecast of 2.2% for OECD countries.
Two other reports one by the Australian Chamber of Commerce & Industry and another by Westpac Bank also indicated robust economic expansion during the March quarter, despite the erosion in business confidence owing to global uncertainties.