Australian dollar at all-time high

The Australian dollar rose to an all-time high against the US dollar as producer prices beat forecasts, indicating that inflation pressures are still strong.

It climbed to $1.0764 in trading on Thursday, the highest since the currency was freely floated in 1983.

Australian producer prices climbed 2.7% between January and March from a year ago, the Bureau of Statistics said.

Demand for Australian commodities has been pushing up the currency.

Analysts say the new highs indicate that interest rates could be set to rise.

"Core inflation pressures are more likely to be drifting higher over the coming couple of years, and thus some future moderate rate hikes are appropriate," said Scott Haslem from UBS.

Greater yields

The Reserve Bank of Australia has kept rates unchanged since November at 4.75%.

However, that is a relatively high interest rate compared with other developed countries, some of which have interest rates as low as 0%, such as the US.

That is encouraging investors to put more money into Australian markets.

"Given the wide interest rate differential between Australia and other developed economies like the US and Europe, investors can earn greater yields on Australian assets," said Matthew Circosta of Moody's Analytics in Sydney.

Dollar worries

But the high value of the dollar is a cause for concern for some Australian industries.

The BBC's Nick Bryant in Sydney said: "If you're an exporter in Australia at the moment, with nothing to do with the minerals sector, then you're experiencing problems.

"You're being priced out of the market because of the rise of the Aussie dollar."

He said tourism was also taking a hit, with visitors finding it too expensive to travel to Australia.