Liam Dann: Feel the excitement as aussie rises

These are good times for obsessive fans of slow-moving events.

There has been test cricket (India vs Australia), Commonwealth Games (road cycling, bowls etc), the Chilean miners' rescue and - best of all - the rise of the Australian dollar.

Some people might say the Aussie currency's leap towards parity with the US dollar has been rapid - from US88c just six weeks ago to a peak of US99.7c this week. But not if you are checking a Bloomberg screen five times a day.

Waiting for that magic moment when one Australian dollar can buy one US dollar has assumed a symbolic importance. Okay, it's not going be as poignant as that first miner embracing his son but it will provide a "gee-whizz" moment so we can sit back and reflect on the strangeness of these times.

At present levels the Australian currency is effectively equal already, at least from the point of view of an exporter or traveller. But those last few points will make all the difference when it comes to making a media splash.

Likewise, the so-called "currency war" is already a fascinating stoush but one which is lacking a flashpoint to ignite the imagination of the wider public.

What we have seen thus far is a cold war - or a phoney war depending on how serious all the posturing by China and the US really is.

The G20 summit in Seoul next month (November 11 and 12) might just be that flash point. The short version of this showdown is that China has its currency pegged at what the US calls artificially low levels. Low currencies make a country's exports relatively cheaper and help boost economic growth.

So the US, Japan and Europe are also trying to push their currencies down to boost the odds of export-led recovery.

But currency values are relative and they can't all be low. So the aussie, the kiwi and a few other currencies underpinned by commodity prices are being pushed to artificially high levels.

We're the collateral damage in this scrap.

That's bad enough for our exporters but a trade war would be worse.

In Washington the hawks are interpreting China's reluctance to let the currency rise as a trade barrier. Congress has passed a bill which - if approved by Senate and the President - could see the US retaliate with more direct trade barriers, like tariffs. And if that happens we really will have an economic war.

It was a trade war in the fragile post-crash era of the early 1930s that caused the Great Depression.

And it is in this kind of highly charged environment that world leaders will meet next month.

The US will be talking tough but whether it actually has the economic strength to follow through with hardball tactics remains to be seen.

Hopefully common sense will prevail and we'll see China budge a little more than it wants to and the US accept a little less than it wants to.

But it doesn't look like there will be much relief for the Australasian currencies any time soon.

On the bright side Australians are going to feel a lot more wealthy in comparative terms with their dollar at parity with the US. Imports are cheaper, they can afford to travel and record commodity prices continue to buffer the big earners of the export industry.

In New Zealand it is the same, only slightly less dramatic. The kiwi hasn't topped records above US80c and is at relatively low levels versus the aussie dollar. That gives exporters a window to sell across the Tasman at least and won't hurt the Aussie tourist numbers heading our way.

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