THE Aussie dollar is predicted to hit $US1.10 within a month after touching parity with the US greenback last Friday.
The historic milestone of parity was reached on Friday at 11.38pm (AEST) time, when the Aussie touched US$1.004 before dropping back to US99.07c.
It was the first time since 1983 that it has been on equal terms with the US currency, experts say the Aussie dollar will surge back through parity and beyond and reach $1.10, thanks to booming China and record prices for Australian commodities.
The Australian economy has not been this strong since the 1950s, when one Aussie Dollar bought US$1.12.
If Australian commodity prices remain high and the Australian economy stays on course – all while the US begins printing more money next month as it has said it would Australia could hit US$1.10 very easily, or even higher.
On the other hand it could fall back very quickly if the world looks like its heading back into recession or the US economy recovers more quickly than expected. If either of those things happen, all bets are off.
Interestingly American investors can borrow money at rates of almost zero, then park their cash in Australian banks and earn 4.50 per cent interest, which is causing huge flows of money into the Australian Dollar.
The moment of parity on Friday came when US Federal Reserve Chairman Ben Bernanke signalled that the US would soon start printing more money – a move which will dilute the value of US dollars and make the Aussie even more attractive.