The Aussie dollar has strengthened even as prices of iron ore—the nation's largest export—dropped, but strategists aren't betting that will continue, predicting more losses for the commodity currency.
Prices of the key steel-making ingredient have recently risen above $40 a ton, but are still down nearly 11 percent over the past month. During the same period, the Australian dollar, or Aussie, dollar rose more than 1 percent.
Usually, sliding demand for iron ore eats into demand for the local dollar as well the country's terms of trade, or the money Canberra collects from exports relative to what it spends on imports. This time around, however, the Aussie seems to holding up fairly well. On Tuesday, the currency traded in sight of 73 U.S. cents, a level breached earlier this month.
But come March, it could fall as low as 68 U.S. cents, warned Sean Callow, senior currency strategist at Westpac.