A chart of the Bloomberg AusBond Index in USD shows how a strong rise in the AUD has bolstered returns for foreign investors in the Australian bond market. The AUD/USD exchange rate bottomed at around USD$0.6860 in mid-January and has rallied steadily to above USD$0.76, as at 17 March, while 10 year bond yields moved lower from 1 January until the beginning of March. They have since moved higher to just over 2.50%. Foreigners hold around 68% of all Australian government bonds on issue so the performance of Aussie bonds in USD terms since mid-January has been stellar, despite the recent rise in Australian bond yields.
AusBond Index returns in USD: