The Australian dollar climbed to a fresh 28-month high on Tuesday, with the gains underscoring the crucial role iron ore prices are playing in supporting the valuation of the currency.

The Australian dollar jumped to US74.53¢, back to where it traded in August 2018, before retreating a touch to US72.24¢. The advance came as the iron ore price headed toward $US150 a tonne, after hitting $US146.93 a tonne overnight in the spot market according to Fastmarkets MB.

Iron ore prices firmed after November trade data for China showed record imports in the month, and year-to-date imports of 1.073 billion tonnes, surpassing last year’s total imports, said NAB commodity strategists.

Australia's own trade metrics are likely to provide a source of support for the Australian dollar.

Credit Suisse portfolio manager Jasmin Argyrou said Australia AAA credit rating was likely to be shielded by its current account surplus.

"If that's maintained then it will lead to generally a more resilient Australian dollar, meaning our currency will hold up better in times of market stress," she said.

Read the full story at afr.com.