- Global Selloff From Dubai Shows Signs of Winding Down
- Dubai Stock Selloff May Bring Buying Opportunity
- Longer Lines, Fuller Carts This Black Friday
- Tiger Woods Out of Hospital After Accident
- Dubai Fallout Is a Correction, Not Another Crisis: El-Erian
- Dubai's Debt Woes Signal New Era for Creditors
- Get Paid Six Figures to Wear a T-Shirt?
- The World's Biggest Debtor Nations
- Five Tips for Buying a Foreclosed Home
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Surprising Options Trades in TiVo Shares
- EA Sports Hopes to Pump Up Sales Through Pop-Up Locations
MOST SHARED
- Tiger Woods Out of Hospital After Accident
- The Good Entrepreneur Winner
- Get Paid Six Figures to Wear a T-Shirt?
- Global Selloff From Dubai Woes Shows Signs of Winding Down
- Halftime Report: Dubai - First Ripple Of Larger Crisis?
- Longer Lines, Fuller Carts This Black Friday
- Next Week: Cash In Now Or Wait For A Santa Rally?
- Dubai Spooks Investors But May Bring Buying Opportunity
Text Size 
Australia can afford to raise interest rates as a few rate hikes won't derail its economy but a swift rise in the Australian dollar could, warned Benjamin Pedley, MD & head of advisory services at LGT Investment Management.
"When you are looking at countries that have room to safely raise interest rates, without raising dramatically the government's interest repayment bill, Australia is probably head of the queue," Pedley said on CNBC's Asia Squawk Box. The Australian government's net debt as a percentage of GDP stands at about 10 percent, versus the U.S. at 190 percent and Japan at 200 percent.
"That is why we would continue to recommend to our clients to buy the Australian dollars on weakness for a nice yield pick up into next year."
The Reserve Bank of Australia raised the official cash rate by 25 basis points to 3.5 percent on Tuesday, saying economic conditions in the country were stronger than expected. The central bank also said global growth had resumed, adding that major countries would see modest expansion in their economies.
"What they do run the risk of, is if they end up being dramatically ahead of the curve in an international sense, in terms of their rate hikes, then I think we could see the Australian dollar rise very swiftly to parity or beyond," said Pedley, "and that would obviously have a knock on effect if it occurs in a very short time frame for Australia, particularly commodity exporters."
So, from an overall economic perspective, things remain on track and are unlikely to be derailed by a couple more interest rate hikes but the currency, if it does get out of control and rises too quickly -- that is the more likely source of a potential problem rather than the economy overall, he concluded.
- These four sectors will be the next to lead the market.
- Zhu Zhu Pets are this year's must-have toy, fetching $40 or more on eBay.
- From the why-didn’t-I-think-of-that file, we present Jason Sadler, a man whose job is wearing T-shirts.
- It may be the most unusual guide to business you'll read.
- Shopping for a gadget hound? The choices can be baffling. Here are a few that should be a hit.
- "The Who" will be the halftime act for Super Bowl XLIV on Feb. 7 in Miami. Is the NFL behind the times?
Data is a real-time snapshot *Data is delayed at least 15 minutes