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Dollar drifts higher

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The Australian dollar has drifted higher as concerns over emerging markets dissipate.

Early Friday, the Australian dollar was trading at 87.85 US cents, up from 87.34 cents on Thursday.

Concerns over emerging markets this week, following surprise interest rate hikes by the Turkish and South African central banks, have caused large falls on global stock markets and weakened the Australian dollar.

But those fears lifted overnight with a broad-based rebound in risk instruments, ANZ senior manager FX in Auckland Sam Tuck said.

“The concern over emerging markets has dissipated overnight and that’s been combined with optimism over equity markets,” Mr Tuck said.

“The Turkish lira strengthened, the Russian central bank pledged unlimited currency intervention and we had better-than-expected equity results.

“That, broadly, has allowed the Aussie dollar to trade higher as it had been depressed by concern over emerging markets.”

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