THE Australian dollar was higher yesterday, trapped in a narrow range below parity with its US counterpart amid fears over the fate of the eurozone economies.
National Australia Bank strategists said the local unit was still benefiting from last week's strong growth figures - Australia recorded the strongest economic growth in the developed world in the first quarter - and better-than-expected Chinese data.
But short covering had "run out of steam at parity", they said.
At the close, the dollar was at US99.52c, up US0.57c from Tuesday, and at ¥79.17 from ¥78.72.
The local unit traded above parity offshore on Monday.
Reserve Bank governor Glenn Stevens, in a strong endorsement of the exchange rate, said yesterday the high dollar was helping spread the benefits of a once-in-a-century mining boom by boosting consumers' purchasing power. "Every time we put petrol in our car, every time we go to a store and buy consumer durables or clothing, a lot of which is imported, every time we travel overseas, we are benefiting from the high exchange rate," Mr Stevens told an economic forum in Brisbane.
"And indeed, as consumers, the exchange rate is one of the devices that is imparting to us the higher wealth that the mining boom brings."
Despite that added purchasing power, and 75 basis points of cuts to official interest rates by the RBA since May 1, the mood of consumers remains subdued, according to a private sector survey.
The Westpac-Melbourne Institute index of consumer sentiment increased by just 0.3 per cent in June from May, while sentiment has risen only 1.1 per cent from April and remains 1.7 per cent below the level recorded in October last year.
