Aussie exchange rates best for decades | Gatton Money, Business and Property | Business News for Gatton, Australia

AAP

EUROPE just got cheaper. If low airfares haven't tempted you to book a ticket to Europe for the northern summer, then the record purchasing power of the Australian dollar just might.

The Australian dollar this week was buying 66 euro cents and more than 60 British pence, toppling records that have been held for decades.

And analysts predict the strength of the Australian dollar to continue until at least mid-year.

Royal Bank of Scotland foreign exchange strategist Greg Gibbs said the Australian dollar had recently reached some of its strongest levels against the euro.

"Clearly it's one of the best times to be travelling," Mr Gibbs said. "And it's likely to persist."

He said Australia's economic and trade links with a strengthening Asia had played a large part in the continued appreciation of the local currency.

The strength of the Australian dollar has also been assisted by the nation's comparatively high interest rates, while recent concerns surrounding sovereign risk in Greece had undermined the euro.

However, Mr Gibbs warned that Australia's large need to fund itself from international capital markets meant the local currency could fall rapidly if funding sources dried up.

Mr Gibbs predicts the currency will continue strengthening against the euro over the course of the year.

During London trade on Tuesday, the Australian dollar reached 66.81 euro cents, a record high since the start of the eurozone currency in January 1999.

The local currency closed at 60.20 British pence on Wednesday, breaking a 25-year high.

In the travel industry, Australia's steady economic recovery contrasts greatly with a slow recovery in Europe.

Flight Centre spokesman Hadyn Long said Australian travellers were experiencing good value, but it was difficult to assess how the strong Australian dollar had affected the leisure travel market.

"There are a number of things that have led to the UK and Europe being fairly popular this year," Mr Long said.

"The (Australian) dollar's one of them, but greater economic certainty and cheap fares have probably been more important."

Airfares had dropped in line with weaker demand in the wake of the financial crisis, he said.

Tourists who want to lock in a high exchange rate before setting off overseas can now purchase travel cards and load them up with selected currencies.

Financial analyst Peter Arnold, of the product comparison company Canstar Cannex, said the Commonwealth Bank was the latest major bank to offer a prepaid travel card service linked to major credit cards, after ANZ and National Australia Bank.

"Generally, the fees on these cards are reasonably low for the transaction and currency conversion.

"But the biggest thing which sets it apart from a credit card, or using your own money to use a debit card, is that you're locking in an exchange rate," he said.

"You're buying your money before you leave and you know exactly how much of that currency you have to spend, so you won't be subject to exchange rate fluctuations."