CANBERRA—Federal Treasurer Peter Costello says while the strength of the Australian dollar is good news for holiday makers and motorists it's putting a constraint on economic growth.
The Australian dollar surged through the 90 US cent barrier for the first time in 23 years as the US dollar remain shaky on the outlook for the US economy.
"This really represents a record level for the Australian currency," Mr Costello told ABC Radio, noting it had only been at such levels in 1983-84, when the dollar was first floated.
He said while people heading overseas will enjoy the benefit of a strong currency, it wasn't such good news for exporters.
"This is a mixed thing (for the economy)."
Mr Costello said imports were cheaper from the surging currency but "what we'd really like is our exports to be more competitive".
"From an economic point of view this does bring difficulties and makes things tougher for our exporters and to that degree is a constraint on growth," he said.
Australian Industry Group chief executive Heather Ridout said the strength of the currency is causing uncertainty for business.
"If it is sustained at these levels, they will have to lift the competitiveness of their business quite profoundly," Ms Ridout told ABC Radio.
"These are very big changes in the price levels of their products that they have to address either out of profit margins or out of higher competitiveness."
However, the treasurer said one benefit of a strong dollar was the dampening effect it was having on high oil prices, potentially keeping inflation in check and preventing another interest rate rise.
As oil is traded in US dollars, importers are now getting more for their Aussie buck.
CommSec chief equities economist Craig James says motorists already have an additional $10 in their pockets from cheaper petrol, and the full impact of the strength of the currency is yet to be felt.
"One of the good things about having a strong currency is that it is shielding us to some degree against oil price rises, so oil and petrol would be higher if the currency wasn't as strong as it currently is," Mr Costello said.
"(But) all things considered, a strong currency...is not all that good for your economy.
"To be in this range...brings with it a lot of problems."