The Australian dollar looks set to be classified as an official reserve currency by the International Monetary Fund, in a sign of the dollar's rising importance on global money markets.
With heavy buying by foreign central banks thought to have supported the Aussie dollar in recent months, the fund is considering whether to add it and the Canadian dollar to its list of official reserve currencies.
Today, only the US dollar, euro, pound, yen and Swiss Franc are classified as official reserve currencies - those held in large quantities by foreign governments.
But buried in a statistical report published late last week, the fund said it was considering publishing data on the official reserve holdings of Australian and Canadian dollars because of the growing foreign interest in these currencies.
Both economies have also benefited from resources booms caused by industrialisation in the developing world.
The global head of interest rates strategy at Westpac, Russell Jones, said the IMF's move was recognition of the growing importance of the dollar for global investors.
"Over recent years, the Australian and Canadian economies have proved more stable and their financial sectors more robust than the more traditional safehavens of the US, the eurozone, Japan, the UK and Switzerland," Jones said.
The move was also a "stamp of approval" for how these economies had been managed, and the data would provide more transparency on official holdings of the dollar, he said.
Up to 23 central banks from around the globe have included Australian-dollar assets in their foreign exchange reserves. It's estimated these official holdings of the dollar are worth about US$60 billion ($73 billion), but exact figures are not available.
However, Jones also said that reserve currency status also came with risks. For one, it could mean safehaven buying of the dollar, which could distort its value.
"The decision on the part of the international community to hold part of its wealth in a particular currency unit means that a certain amount of control over that currency and over its domestic debt markets is necessarily ceded," Jones said.
As well, he said a reserve currency nation that had an economic "fall from grace" could also suffer a major out-flow of capital, worsening its economic problems.
Other commentators, however, say the IMF's decision is unlikely to have a major impact on the dollar.
Deutsche Bank's foreign exchange strategist, John Horner, said it would not significantly change investors' views.
"It seems a statistical recognition of what is already the reality," Horner said.
"We know that there's been increasing interest in owning Australian dollars by reserve managers - this won't affect investment mandates."
- Sydney Morning Herald