By Ambar Warrick 

-- Australia’s trade surplus grew more than expected to a record high in June, underpinned by steady exports and a small rise in imports from the prior month. 

The country logged a trade surplus of 17.67 billion Australian dollars (A$) in June, higher than forecasts of A$14 billion, and May’s reading of A$15.96 billion, data from the Australian Bureau of Statistics showed. 

The Australian dollar reacted positively to the data, trading 0.1% higher at $0.6953, as of 2200 ET (0200 GMT). The currency is now close to breaking above the psychologically important $0.7 level. 

Australia’s strong June surplus was driven largely by iron ore and coal exports- its top produce. Total exports rose 5.1% from May to A$61.53 billion. The country is the largest producer of iron ore in the world, with the material counting for nearly a third of its exports in 2020.

Most of Australia’s iron ore and coal exports go to China. The mainland is also a key market for other Australian products, including liquefied natural gas and consumer goods. 

In a sign of strong domestic demand in Australia, imports remained steady, rising 0.7% in June to A$43.86 billion. 

But this trend may shift in the coming months, as the country grapples with rising inflation in the wake of the COVID-19 pandemic. Consumer price inflation has surged to 30-year highs in 2022. 

The Reserve Bank of Australia (RBA) hiked interest rates as expected earlier this week, and said it expects inflation to peak later in the year. The bank also expects Australia’s economy to grow by nearly 4% in 2022, after a 1.5% rise in the prior year. 

Still, the Australian dollar had fallen after the rate hike, as the RBA did not lay out a concrete path for policy tightening this year.