Dollar back above parity after concerns over Libyan tensions

THE dollar clawed its way back above parity after an overnight fall brought about by political tensions in Libya.

THE dollar clawed its way back above parity after an overnight fall brought about by political tensions in Libya.

At 12.00pm (AEDT) , the local unit was trading at 100.30 US cents, slightly up from yesterday's close of 100.27 cents.

Since 7.00am (AEDT), the Australian dollar traded between 99.86 cents and 100.28 cents.

Libyan leader Muammar Gaddafi yesterday ordered his forces to crush an uprising that has rocked his 41-year rule, warning armed protesters they will be executed.

Since Egyptian president Hosni Mubarak resigned on February 11, anti-government movements have spread through the Middle East to Libya, Tunisia and Bahrain.

Nomura Australia chief economist Stephen Roberts said the dollar had experienced some weakness amid the political tensions.

"There will be a little bit of concern whilst we've got these flare-ups in parts of North Africa and the Middle East," he said.

"There's concern oil prices may be elevated for a period."

Mr Roberts said it is inevitable the dollar will recover, because there are signs the global economy is recovering.

"It's going to be something of a battleground and I wouldn't be at all surprised to see the Australian dollar quite well supported over the course of the next few weeks.

"I think the relative strength of the global economy is going to turn out to be the more important factor," he said.

He expected the dollar to trade in a range between 100.00 US cents and 100.40 cents this afternoon.