THE Aussie dollar could hit $US1.70 in three years, according to one of the world's leading money experts.

The dollar, which peaked at a record $US1.10 last week, has been a boon for shoppers by making imports cheaper, slashing the cost of overseas holidays and keeping inflation down in the process.



Many believe that the dollar will dip later in the year but Dr Savvas Savouri, head of Toscafund hedge fund, claims it could keep on climbing, reaching $US1.30 by 2013 and $US1.70 by 2014.



"The simple fact is the appreciation of the Australian dollar will be extraordinary," he told The Australian.



He said that the huge demand for Aussie resources in China and India was fuelling the dollar's record run.

ANZ's chief executive Mike Smith agreed.

"I can't see that there is anything to knock it off its perch because it's not only the strong Australian dollar, it's also the weak US dollar," Mr Smith said.

"And when you think about what is happening in the US, I can't see them increasing rates for at least 18 months and that will have an impact."

Here is a quick guide to how the booming Aussie dollar will affect you.

Shopping: cheaper imported goods

A more valuable dollar is making it cheaper for retailers to import things from overseas. They can pass on these savings to shoppers.

Interest rates: likely to ease pressure

The high dollar is likely to restrict the Reserve Bank (RBA) to only one interest rate rise this year. This means less pressure on the household budgets because it will minimise increases in mortgage repayments.

Travel: cheaper airfares, more spending power

As Aussies can now buy more with their money overseas, they are also going to become more likely to travel abroad to do so.

And as the demand for flights rises, airfares will also become cheaper.

Petrol prices: a buffer against oil prices

Petrol prices have been rising – up almost 9 per cent in the latest inflation figures – but the dazzling Australian dollar is acting as a buffer, shielding motorists from even higher fuel costs.

Fueltrac general manager Geoff Trotter says petrol prices could be as much as 15 cents higher if the dollar had not gone on a record-breaking post-float run over the past 12 months.