The sharemarket rose for a third consecutive session yesterday after the Australian dollar weakened further in offshore trade.
Non-resources companies with US-dollar income remained in demand, although commodity price falls restrained the resources sector.
The benchmark S&P/ASX 200 closed up 0.2 per cent at 5221 points after rising to 5227.1.
The index was up 12 per cent year-to-date, versus a 15 per cent rise in the S&P 500.
Share-trading volume shrank to $5 billion, from $5.4bn on Monday, as investors awaited the details of the federal budget, which was announced by Wayne Swan last night.
With the US dollar surging to a 4 1/2-year high against the Japanese yen, the Australian dollar hit a fresh 11-month low versus the greenback, helping sustain a theme that helped push the local sharemarket to a five-year high of 5242.5 last week.
"We have the backdrop of the weaker Aussie flowing through to US dollar earners, although weaker commodity prices are keeping the resources names in check," said IG market strategist Stan Shamu. "That's the major theme and I think everyone is still repositioning themselves for a stronger US dollar."
Among the main beneficiaries of a weaker exchange rate, CSL, News Corporation, QBE Insurance, Brambles and Amcor rose between 1.2 per cent and 3.1 per cent.
QBE shares reached their highest level in more than 1 1/2 years as analysts said conditions for its US business improved.
Deutsche Bank raised its price target on Australia's largest insurer to $16.25, from $15.06.
Analyst Kieren Chidgey said US commercial insurers' recent results pointed to 5-10 per cent premium rises in the first quarter of the year, making QBE's target to raise its real estate premiums 5 per cent this fiscal year look "increasingly achievable".
Among declining shares, Newcrest Mining, Fortescue Metals and Atlas Iron fell between 2.4 per cent and 4.2 per cent after spot iron ore fell 0.2 per cent and spot gold fell 1.2 per cent.
Deutsche Bank cut its ratings on Newcrest, Resolute and Evolution Mining, after lowering its gold price forecasts.
However, Rio Tinto slipped just 0.1 per cent and BHP Billiton rose 0.4 per cent after London Metals Exchange copper rose 0.6 per cent in offshore trading.
High-yield stocks mostly underperformed, with ANZ Bank, Westpac, NAB and Telstra down 0.2-0.6 per cent, although CBA rose 1.3 per cent.
The dollar opened the day's Asian trade below parity with the US dollar as commodities prices fell following weaker than expected Chinese data.
At 5pm AEST, it was trading at US99.8c, down US0.19c.
JPMorgan analyst Anna Hibino said the dollar was now trading around a critical level.
"The weakness isn't attributable to domestic factors," she said. "Part of it has to do with slightly weaker numbers from China and commodity prices."
