The already overvalued Australian dollar will reach parity with the US dollar in the next six to 12 months and peak at about $US1.02-03, a currency strategist says.
State Street Global Advisers head of currency management Collin Crownover says the unit is already overvalued by about 20 per cent and that the figure would stretch out to 30 per cent if it reached the $US1.03 mark.
"I think we'll see about a 10 per cent appreciation from where we are now," the London-based Dr Crownover said in Sydney on Friday.
"At that point, certain dynamics come into play and that becomes an extreme overvaluation.
"Even though Australia has a much better growth profile than the rest of the G10 right now, people at that level might take pause and say even though the growth is a lot better, that's pretty rich, relevant to the valuations used for investments into Australia."
Asked whether he felt the Australian dollar would remain at parity for long he said: "Perhaps not.
"We do think it will reach parity within the next six to 12 months.
"Then the Australian dollar becomes 30 per cent overvalued and historically that's been a point at which we see significant imbalances and it's much more likely to be corrected."
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