Surging Australian dollar makes life tough for central bankers

The Australian dollar is enjoying a rip-roaring July, and that’s put the Reserve Bank of Australia in a difficult spot, analysts said.

The currency

AUDUSD, +0.1632%

known as the Aussie,  earlier this week traded above 80 U.S. cents for the first time in two years. It’s up nearly 4% against the greenback in July and has appreciated 11% since the beginning of the year. The gains in July have also been broad, with the currency rising against all major rivals.

The Aussie’s ascent has been driven by positive surprises in the economic data while imports from China remained stronger for longer than previously expected. But a stronger currency is also a headwind for economic activity and the inflation outlook, which is likely to force the central bank to keep interest rates at record low 1.5%, according to analysts at Bank of America Merrill…

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