The high-beta Australian and New Zealand dollars are expected to stay buoyant over the coming year thanks partly to their high yield status, despite lingering worries about global growth and Europe's sovereign debt problem. The Australian dollar is seen trading between $1.04 to $1.06 in the next 12 months, the median forecast of 49 analysts polled by Reuters showed. See and for polls.
On Thursday, it was trading just below $1.06, having risen more than 3 percent this year. A survey of 45 analysts showed the New Zealand dollar is expected to stay around $0.8200 over the year, having already gained nearly 5 percent since January 1. The Aussie and kiwi dollars are among the best performers this year thanks to their commodity currency status and exposure to China, which is a key export market for both Australia and New Zealand.
This week's decision to keep interest rates steady also cemented their position as high-yielding currencies. Both the Australian and New Zealand central banks left their cash rates unchanged at 4.25 percent and 2.5 percent respectively, among the most attractive in the developed world. In contrast, the US Federal Reserve has pledged to keep rates near zero all the way to 2014, and the Bank of Japan surprised by easing its policy last month. These measures have encouraged investors to borrow in dollars and yen to fund carry trades in higher yielding assets.
As a result, the Aussie and kiwi have jumped around 10 percent against the Japanese currency. Forecasts suggest the Australian dollar could dip below 83.00 in the next few months before recovering to 84.00, down slightly from 86.00 currently. The kiwi dollar, on the other hand, is seen retaining its hefty gains on the Japanese currency, with forecasts centering on 66.4 yen for this time next year, compared to 66.38 currently.