THE Australian dollar was modestly higher late yesterday at the start of a week with few important statistics due to be released. At 5pm AEST the dollar was trading at $US1.0553, up US0.3c from Friday's close. Ray Attrill, global co-head of foreign exchange strategy for National Australia Bank, said last week's comments from the RBA suggested the central bank was "coming to terms" with the persistent strength of the local currency, which was being driven by demand for Australian government bonds. He said there was still a risk of foreign exchange intervention or further rate cuts if the Australian dollar was seen to be inflicting additional economic damage, though he added: "Neither course of action looks imminent." The central bank last Friday warned that the strong dollar could hurt the economy more than in previous cycles. Those comments spooked economists who believe the RBA is upping its rhetoric on the Aussie's strength, though few anticipate any intervention soon. Without the high level of interest in Australia's AAA-rated assets, "fair value" for the dollar would be in the US95c-US99c range, Mr Attrill said -- about 5-10 per cent lower than current levels. NAB expects little further rise in the dollar.

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