Australia ETFs: What Third Rate Hike Means

Australia’s economy and exchange traded fund (ETF) have been enjoying a rebound this year. With that, the country has hiked rates for a third time in as many months. Now what?

This week, the Australian government raised interest rates by 0.25%. It was the third hike in as many months, signaling that the country’s policy makers like the direction in which the country is headed, reports Bettina Wassener for The New York Times.

The increase, which took the key cash rate to 3.75 %, had been widely expected. But it was a reminder of how Australia has remained relatively resilient throughout the global crisis. Dubai’s Worlds decision did not affect the Aussie government’s confidence in their recovery. (Why Australia has held up).

James Glynn for The Australian Business Journal reports that the mining sector continues its expansion, contributing to the strong performance down under. Mining investment in Australia, which was already at record levels as a share of the economy, could rise much more in the next five years or so. (Why Australia’s ETF is on the right track).

The Aussie dollar rallied on the news of the interest rate hike. It’s already one of the best-performing currency ETFs year-to-date. (How does the Aussie dollar handle these changing times?)

For more stories about Australia, visit our Australia category.

• CurrencyShares Australian Dollar Trust (NYSEArca: FXA): up 32.7% year-to-date

• iShares MSCI Australia (NYSEArca: EWA) up 69.1% year-to-date