The Australian dollar has firmed as investor confidence was boosted by a Turkish interest rate increase.
At 1700 AEDT on Wednesday, the Australian dollar was trading at 88.02 US cents, up from 87.76 cents on Tuesday.
The local unit hit a one week high of 88.24 US cents around the middle of the day after Turkey's central bank raised its overnight lending rate from 7.75 per cent to 12 per cent, to shore up the lira.
This in turn boosted global risk sentiment, Asian equity markets and demand for currencies in emerging Asian markets, which all helped the Australian dollar, Commonwealth Bank chief currency strategist Richard Grace said.
"It appears the concerns we had in emerging markets that looked to be affecting the Australian dollar have dissipated," he said.
"We have also had a further strengthening of the Indonesian rupiah, which is another one of these emerging market currencies that has been under recent downward pressure because of high inflation slowing GDP growth."
The Australian dollar could face renewed pressure during offshore trade if the US Federal Reserve's Federal Open Market Committee announces a plan to taper its stimulus measures again, which would boost the greenback.
The possibility of the Reserve Bank of New Zealand raising its overnight cash rate could also weaken the Australian currency against its Kiwi counterpart.