Analysts Expect a Rebound in the Aussie Dollar by Year End

“Australia’s dollar will rebound by year-end on demand for the world’s highest-yielding AAA assets even if the Reserve Bank cuts interest rates to a record, according to the currency’s most-accurate forecasters.

The so-called Aussie will climb to $1.05 by Dec. 31, from $1.0268 at 12:54 p.m. in Sydney, according to Credit Agricole CIB, which had the lowest margin of error for the past six quarters as tracked by Bloomberg Rankings. Second-rated National Australia Bank Ltd., which has the weakest end-2012 projections among the top five forecasters, sees the local dollar at parity by Dec. 31. The median prediction from 44 analysts surveyed by Bloomberg News is for $1.02.

“The attraction to the Aussie dollar as a reserve currency remains fairly strong,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole. “Given that market expectations for rates are already pretty dovish, I don’t think we’re going to see too much more of a negative impact on the Aussie.”

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