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Aussie dollar soars

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The Australia dollar yesterday jumped to its highest level in a year, surging to US85.39c before closing at US85.18c. Icap senior economist, Adam Carr has predicted the Australian dollar will continue to rise against the US dollar as the likelihood of a rate hike increases. "I think we will get above US90c when the RBA starts to tighten, and depending on the pace of that, we could be at parity next year," Carr said. However, St George chief economist Besa Deda said the Reserve Bank could be apprehensive about the higher Australian dollar "dampening" the recovery of the local economy by increasing export prices and producing a trade-related drag on growth. Deda said, "A high currency can dampen growth prospects, but from an inflation standpoint, it can dampen imported inflation."

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