Moody's: Australia vulnerable to external shocks

SYDNEY--Australia is vulnerable to a global downturn and the government's pledge to return the budget to surplus will be challenged but the Australian dollar will still be partly supported by its emerging "safe haven" status, said Steven Hess, senior credit officer and the chief sovereign analyst for Australia at Moody's Investors Service.

Central banks buy up Australian dollar bonds

ASIAN and South American central banks are becoming major buyers of Australian government bonds in a move to diversify their US investments, which is driving demand for the Australian dollar.

Despite reverses in the Aussie yesterday amid volatility in foreign exchange markets due to Greek debt fears, analysts said fundamentals backed the dollar.