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Expected to be the first central banker to raise rates...RBA governor Glenn Stevens.

The Australian dollar has surged to a one-year high and could climb further as markets bet the Reserve Bank will beat other central banks in raising interest rates.

The currency touched US85.39c yesterday, its highest level since financial turmoil deepened last September, which ultimately dragged the dollar as low as US60c. Investors are now pushing up the dollar amid firming expectations that Australia has avoided the pain inflicted on other developed economies, which could lead to rate rises in the coming months.

Money markets are betting the Reserve Bank will raise the cash rate from 3 per cent by 0.5 percentage points by the end of this year and almost 2 percentage points over the next year.

Central banks in most developed countries are not expected to follow suit until next year at the earliest, and higher interest rates here attracts investors in search of a higher return, or yield. Amid a stream of positive figures on the Australian economy, some analysts say the currency could go past US90c in the coming months.

Winners from the surge are those with a large import bills because it lowers the cost of goods and services bought overseas, while companies with earnings in US dollars suffer from a stronger dollar. Qantas and Virgin Blue could face lower fuel bills, provided oil prices do not rise with the currency.

Boral benefits because a stronger dollar lowers the value of its US dollar debt. Miners, on the other hand, are prone to negative impacts on earnings because their sales are measured in US dollars. "Their revenue base is in US dollars but their cost base is in Australian dollars," said an RBS equity strategist, Greg Goodsell. Firms with large US operations, such as Brambles, James Hardie and News Corporation, also suffer because the appreciation means each US dollar made overseas is worth less.

A growing chorus of currency watchers predict the current surge could continue, but they say revisiting last year's high of US98.27c is unlikely. Analysts at NabCapital and RBS say US90c will be on the agenda for the dollar by early next year, but breaking beyond this could prove hard going because interest rates will remain well short of last year's high of 7.25 per cent.

Others have are more pessimistic. The currency strategist at Deutsche Bank, John Horner, forecast the dollar would fall back towards US70c next year because global trends in consumer demand and business investment were too weak to support the current level of production.