The Australian dollar rose in the Asian market on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against its US counterpart and recording its highest level in four years, amid positive sentiment dominating global markets and slowing purchases of the US currency as a safe haven, especially after Donald Trump announced significant progress in peace negotiations with Iran.

Following a hawkish meeting, Reserve Bank of Australia Governor Michele Bullock confirmed that the bank is acting proactively to control inflation before it gets out of control. Those comments strengthened the chances of an Australian interest rate hike in June.

Price Overview

Australian dollar exchange rate today: The Australian dollar rose against its US counterpart by about 0.9% to 0.7243, the highest level since June 2022, from the opening level of 0.7181, and recorded a low of 0.7180.

The Australian dollar ended Tuesdays trading up by more than 0.2% against the US dollar, marking its third gain over the past four days, following a hawkish monetary policy meeting by the Reserve Bank of Australia.

The US dollar

The dollar index fell on Wednesday by more than 0.25%, heading toward its first loss in the past four sessions, reflecting the decline of the US currency against a basket of major and secondary currencies.

Risk sentiment improved in global markets, with slower purchases of the US dollar as the best alternative investment, due to growing hopes of reaching a peace agreement between the United States and Iran.

In a notable development, US President Donald Trump announced that the United States and Iran had reached an agreement to suspend the movement of Project Freedom ships through the Strait of Hormuz, as long as the blockade remains fully in place, indicating that this decision comes amid significant progress toward reaching a comprehensive agreement between the two sides.

Trump explained that the suspension came in response to a request from Pakistan and several other countries, confirming that it is a temporary measure aimed at allowing time to complete negotiations and sign the anticipated agreement.

In the same context, US Secretary of State Marco Rubio stated that the Salty Rage operation had ended and that the priority is now focused on reopening the Strait of Hormuz.

Australian interest rates

The Reserve Bank of Australia raised the benchmark interest rate yesterday, Tuesday, by 25 basis points to 4.35%, the highest level since December 2024, marking the third consecutive interest rate increase.

Eight board members voted in favor of the increase, while one member voted against it, reflecting broad consensus within the bank on continuing monetary policy normalization.

Reserve Bank of Australia Governor Michele Bullock said that the bank is acting proactively to control inflation before it gets out of control.

Bullock explained that the decision to raise interest rates aims to contain growing inflationary pressures, especially those resulting from geopolitical tensions and rising energy prices.

Pricing for the probability of the Reserve Bank of Australia raising interest rates by 25 basis points in June is currently stable around 75%.

In order to reprice those probabilities, investors are awaiting the release of more data on inflation, unemployment, and wage levels in Australia.