Australia closed-out 2009 with another positive quarter. For the full year, the economy managed to expand by 2.4 percent and was the only major economy to remain recession-free for the entire year. By way of contrast, the US contracted by 2.4 percent, while Germany, the UK, and Japan all experienced declines of 5 percent.
Because of its strong growth, Australia was the first major economy to raise interest rates, and just this past week, introduced its fourth rate increase bringing the country’s benchmark lending rate to 4 percent.
Carry Trade
The disparity between interest rates in Australia and other countries – including both Japan and the US which are currently at record-lows – has revived interest in the carry trade. Currency traders earn interest on open long positions, while paying interest on open short positions. If the interest earned is greater than the interest paid, the trader is said to be in a positive carry position, with the net difference being retained as profit.
Source: BBC News
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