THE Australian dollar rose to a two-month high on the back of news of a bailout deal to support banks in Cyprus and its embattled government.
The bailout will consist of US$10 billion in financing for the government and require the restructuring of the country's second-largest bank, Cyprus Popular Bank PCL, while imposing steep losses on large deposit holders.
"Asian currencies have started the week off on a positive footing. The Cyprus bailout deal has given sentiment a positive shot in the arm," Westpac currency strategist Jonathan Cavenagh said.
The Aussie fetched US$1.0456 in late afternoon trading compared with US$1.0429 late on Friday. It traded as high as US$1.0463 after the Cyprus deal was announced.
Commonwealth Bank of Australia currency strategist Peter Dragicevich said the market's favourable reaction to news from Cyprus was helped by the fact that there were few surprises.
