Aust dollar surges past US89c

Local unit hits three-week high on RBA call, stabilisation of global markets.

The Australian dollar has climbed back above 89 US cents after the Reserve Bank of Australia opted to remove the easing bias to monetary policy and global markets steadied overnight.

At 0715 AEDT, the local unit was trading at 89.36 US cents, up from 88.67 cents at the close of local trade on Tuesday. It has gained almost two cents in 48 hours.

The local currency reached a high of 89.44 cents during trade, which represents the highest level since January 15.

The initial upward move was driven by the RBA, which left the cash rate at a record low but, significantly, signalled rates would not move in the near future. Until then the RBA had retained a bias toward rate cuts.

"On present indications, the most prudent course is likely to be a period of stability in interest rates," the central bank said.

Meanwhile, global markets stabilised overnight, with Wall Street climbing close to 1% in late afternoon trade. Stocks in Europe largely extended losses.

The tempering of market fears helped drive the Australian dollar higher as investors moved away from traditional safe haven currencies like the Japanese yen, US dollar and Swiss franc.