The local dollar, known as the Aussie, is the best performer among the 17 most-active currencies in February on rising odds the Reserve Bank of Australia will increase its 6.75 percent benchmark. The currency pared gains after a government report showed building approvals fell in December by four times as much as economists forecast.
The Australian dollar reached 91.01 U.S. cents, the highest since Nov. 9, before trading at 90.56 cents at 11:57 a.m. in Sydney from 90.78 cents late in Asia yesterday. Against the yen, the currency touched 97.21, the strongest since Jan. 15, before trading at 96.67 from 97.04 yesterday.
The Aussie has advanced 1.1 percent versus the U.S. dollar this month as the odds of the RBA raising borrowing costs to 7 percent rose to 89 percent, according to an index calculated by Credit Suisse Group based on trading in interest-rate swaps.
The odds increased yesterday after an index measuring Australian consumer prices climbed at the fastest annual pace in 20 months in January, according to a report released by TD Securities Ltd. and the Melbourne Institute.
The RBA has increased borrowing costs twice in the last six months, helping the currency gain 6 percent in that time. An increase in Australia's borrowing costs would take the country's rate advantage over the U.S. to 4 percentage points, the widest margin in more than three years. Macquarie's Masters is forecasting the currency to equal November's 23-year high of 94 cents by June.