THE AUSTRALIAN dollar has pushed through the US75 cent mark on its way to its highest levels against the greenback in two and a half years.
This week the Australian dollar hit US75.2 cents, which marks a massive rise since it slumped to just over US55c on March 18 as the COVID-19 first wave took its toll, it highest mark since June 2018.
A combination of weakness in the USD and buoyant iron ore prices are the two major drivers behind the rise.
The rise is likely to be toughest on Australia's red meat industry, with Aussie beef already the most expensive on the world stage and lamb at historically high levels.
On the other hand, grain commodities are cheap on the global stage, with analysts predicting no serious difficulties in moving product as a result of the dollar's appreciation.
Phin Ziebell, NAB commodities analyst, said ironically, given growing trade tensions between the two nations, China was indirectly responsible for the rise in the dollar.
"Iron ore is a big one, prices have gone through the roof and the AUD is sensitive to those rises and has risen with it," Mr Ziebell said.
He said the other major influence was weakness in the US dollar.
"If you look on the cross rates (exchange rates against other currencies) the Australian dollar is not doing much, but the US dollar weakness has been a huge factor."
Adrian Ladaniwskyj, senior analyst at Mecardo, had a similar take.
"There is a lot of weakness in the USD, the stimulus packages are looking shaky and that has impacted the market," Mr Ladaniwskyj said.
He also said the iron ore price was helping the AUD.
"Iron ore is starting to get expensive and that is correlated with our dollar," he said.
Mr Ziebell said concerns about the latest US stimulus package passing through government there had taken its toll on the dollar.
In comparison, while Australia has endured its share of COVID-19 induced market pain, he said the rebound has been quick.
"The evidence is there, controlling and nearly eliminating COVID-19 is the best thing for the economy rather than trying to keep going and staying stuck in a rut," he said.
"The rebound in Australia has exceeded our expectations."
Mr Ziebell said he expected the dollar to keep rising, with NAB forecasting levels of US80c by mid 2022.
"It is high compared to recent history but you only have to go back to 2011 and we were above parity."
"If you ask any exporter if they would rather the dollar at US65c or US80c they'll always say US65c but given where we have been in the past ten years you'd say it will be manageable."
On the grain side he said the strong basis that had underpinned Australian local prices through the drought had gone and that in spite of the higher dollar, prices were still strong.
"The high international prices are more of a factor than the dollar at present."
However, Mr Ladaniwskyj said it would be tougher in the meat sector, where prices are higher on the world stage, meaning relatively small fluctuations in currency can have a real impact on competiveness.