AS Australia's exporters feel the blow torch of an uncompetitive dollar, one of the country's big banks has moved to forecast stellar gains for the currency.

In a research note by Macquarie Bank, the Australian dollar is forecast to approach fresh post-float highs of US$1.20, supported by the economy's relative strength and proximity to Asia's booming economies.

With global markets in upheaval in early August, the Australian dollar buckled briefly and fell below parity, but it has since stormed back, with traders expecting it will soon retest the 30-year high of US$1.108 it reached in late July.

At 4am GMT today, the Australian dollar was at US$1.0691.

"Global events of the past month have emphasized Australia's relative economic strength - record high terms of trade, low government debt, a strong focus on government to return the budget to surplus, still low unemployment and, critically, significant room to lower interest rates," Macquarie said.

Combining Australia's strong fundamentals with a solid Asian picture, the Australian dollar has the potential to appreciate further, while weakness in both the euro and the US dollar will be crucial factors bolstering the Aussie, it added.

"In the past, whenever global financial markets got the wobbles, investors would desert the Australian dollar like rats leaving a sinking ship," Macquarie said.

"In recent months, however, the Australian dollar has remained relatively resilient despite very volatile markets and concerns about the sovereign debt crisis," it added.

Originally published as Aussie dollar climbing to US$1.20