Here's an odd thing: the Australian dollar just punched through the 95 US cent mark for the first time in almost a quarter of a century.
The trigger was yesterday's off-the-chart inflation figures for the March quarter, which had pundits and investors alike rethinking their outlook for interest rates.
All else being equal, Australian interest rates that stay higher longer - or may rise even further - make Aussie assets more attractive, with the currency typically the easiest to punt on.
Given that spurt in the dollar, and the fact large slabs of the economy are still heating up, we might expect the long-lost parity with the US dollar to become the talking point, right?
Wrong.
In fact, data compiled by global business financial news service Bloomberg of 32 banks and other firms indicates none of them are pricing in one Australian dollar as equal to the greenback.
Not at the end of the June quarter, when we will know if the Federal Budget has stoked the inflation fires with the promised tax cuts.
Not at the end of 2008, when we should have iron-ore prices up at least 60%, and receipts from the tripling in the price of coal - the country's biggest single export - finally narrowing the trade gap.
Nor even in the years out to 2012, for those analysts bold enough to peer that far ahead. (In fact, the longer out, the lower they rate the Australian dollar.)
Of course, the Australian dollar's recent rally against the US dollar - up 5 US cents since March 21 - owes much to weakness in the greenback, and so some revival makes sense.
However, what's harder to assess is why analysts aren't yet willing to call a closing of the local currency's diminishing gap with the US dollar.
To be fair, some prominents forecast the Australian dollar will continue to rise but are just not quite ready to declare parity is imminent.
"There are lots of reasons the Australian dollar can strengthen from here," said Westpac economist Bill Evans. "The commodity outlook remains positive. The US looks likely to cut rates."
Even an improvement in the credit crisis would probably be good news for the Australian dollar as it benefit highly indebted economies such as Australia, Mr Evans said.
But even with those underlying forces, Westpac's current call is for the dollar to rise only modestly, to 96 US cents by the end of 2008.
"Achieving parity is not in the forecast but considering the current volatility, we can't rule it out," said Tony Morriss, senior currency strategist at ANZ Bank.
"The Aussie dollar has taken quite a big step on the inflation data,'' Mr Morriss notes.
Still, Mr Morriss said the ANZ still forecasts the Aussie will only hold at 94 US cents by mid year, helped lower by a slowdown in the global economy.That implies a drop from today's rate of about 94.7 US cents.
That's a view echoed by Jeff Oughton, senior economist at National Australia Bank.
He expects the Australian dollar to stay in the mid-90 US cent range based in part on the view the Reserve Bank won't raise rates again.
Also retarding the Australian dollar's advance is uncertainty about just how good a price iron-ore exporters like BHP Billiton and Rio Tinto can strike with China and other markets, Mr Oughton said. (The two miners are looking for increases north of 70% for the year starting April 1.)
"The appetite for a commodity currency will remain strong until next year," said Mr Oughton. "But the Aussie will begin to head down (against the US dollar) as the US economy starts to recover next year."
NAB, in fact, forecasts the Australian dollar falling to 88 cents in the first quarter of 2009, according to data compiled by Bloomberg.
Macquarie Group's interest-rate strategist Rory Robertson isn't about to call parity, either.
"Parity is just another small step in a big rally," Mr Robertson said. "The market has had a few goes at (parity) and failed."
He reckons most of the Australian dollar's recent gain has been linked to the US dollar's drop, noting that the euro has risen too.
"The Australian dollar is a commodity currency with an interest rate hike story attached to it," said Mr Robertson. "But the commodity price boom has never been priced into the Australian dollar."
"The euro doesn't have an interest rate and commodity story but has done as well against the US dollar as the Australian has," he said.
Even without the full propellant of higher commodity values priced in, Macquarie is also not about make the parity call. Its forex division is predicting 95 US cents in the current quarter, before the Aussie dollars to 90 cents in following three months, and dipping to 88 cents by year's end.
Will Richardson, Macquarie's division director of foreign exchange, can't rule out a short-term blip to 100 US cents, but said the expected peaking in Australian interest rates and commodity prices would drag it back.
For now, "the Aussie is priced for perfection," Mr Richardson said, and he predicts that perfection won't last.
Not all analysts, though, share the widespread pessimism about parity.
Sonray Capital Markets chief economist Clifford Bennet thinks the RBA will have to take a hard line on inflation, with the resulting higher interest rates giving the Australian dollar fresh momentum.
Mr Bennet, in fact, thinks parity with the US dollar will be fleeting when it's reached this year - with the Australian dollar climbing further, to between $US1.08 and $US1.12 next year.
"While any further equity market shake-out might generate some volatility in the Australian dollar's path, the trend will indeed remain bullish," he says.
BusinessDay, with Vanessa Burrow, The Age
