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Australian dollar up and driven by rising iron ore prices
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Sunday, 30 Dec 2012

The Australian dollar is higher, getting some support from stronger iron ore prices and gains on the local sharemarket.

Mr Hans Kunnen, St George chief economist said that the local dollar's rise was not because of the US budget negotiations to avoid a series of tax hike and spending cuts that are expected to put America into recession, dubbed a fiscal cliff.

Mr Kunnen said htat "I'd put it down to rising iron ore prices, to be honest."

He said that "Part of it is that you watch the equities and you watch the Aussie dollar, on a day to day day basis they move together, so we've having a firm day in local markets, there could be some offshore buying of Aussie equities. It's thin trade, iron ore prices are up and equities are up."

In morning trade, the Australian dollar peaked at JPY 89.835, its highest level since April 2011.

Mr Kunnen said that this was because the yen has been losing ground ever since the new Japanese PM Mr Shinzo Abe came to office and pledged to work with the Bank of Japan to stimulate the nation's economy.

He said that "It's strengthening against the yen simply on the basis that they're printing money and they've abandoned their low inflation target, so down goes their currency."

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