Australian Dollar Surges on RBA Hike: Which ASX Stocks Win and Lose from a Stronger Currency?

Australian dollar: ASX winners and losers to watch

The Australian dollar jumped above US$0.70 after the Reserve Bank of Australia raised interest rates. The RBA lifted the cash rate by 25 basis points to 3.85% in a unanimous 9-0 vote. This marks a big shift in direction. Just last year, the RBA cut rates three times, bringing the cash rate down to 3.60%. Now, with inflation stuck at 3.8%, the central bank has reversed course. For investors, this move matters because Australia is now one of the only major developed economies actively raising rates while the US Federal Reserve continues cutting. That policy divergence is drawing capital into Australian assets and pushing the dollar higher.

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Why the Australian Dollar Is Rallying

The key driver here is simple: money flows towards higher yields. With the RBA hiking while the Fed eases, Australian bonds now offer a more attractive return compared to US Treasuries. This yield advantage is pulling foreign capital into Australia, which strengthens the dollar.

What makes this rally likely to continue is the RBA’s hawkish tone. Governor Michele Bullock made clear the board is “uncomfortable” with inflation sitting at 3.8%, well above the 2-3% target band. Both NAB and CBA are now predicting a further hike in May, which would take the cash rate to 4.10%. Markets are pricing an 89% chance of that May increase, suggesting investors believe this isn’t a one-and-done move.

Key Levels to Watch

The Australian dollar is currently trading around US$0.70, having rallied more than 1% on the RBA decision. The next resistance sits at US$0.7094, the January 29 high and the pair’s highest point since February 2023. A break above that would open the door to US$0.7158, the February 2023 high.

On the downside, support lies at US$0.69, with US$0.6850 as a secondary floor.
Several major banks have upgraded their forecasts following the hawkish RBA stance. Bank of America raised its fourth-quarter 2026 AUD/USD forecast to US$0.73, while OCBC lifted its end-2026 target to the same level. If the RBA delivers multiple hikes as NAB expects, the US$0.72-0.73 range becomes a realistic target.

What a Stronger Aussie Means for ASX Investors

A rising Australian dollar creates clear winners and losers on the ASX.

Winners from AUD strength:

Companies that import goods benefit when the Australian dollar rises because their overseas purchasing costs fall. Retailers like Premier Investments (ASX: PMV), Nick Scali (ASX: NCK), and Myer (ASX: MYR) source much of their inventory from Asia, meaning a stronger dollar improves their margins. Consumer goods companies and businesses with significant US dollar costs also benefit.

Losers from AUD strength:

The big miners face headwinds because their products are priced in US dollars while their costs remain in Australian dollars. A stronger AUD means BHP (ASX: BHP), Rio Tinto (ASX: RIO), and Fortescue (ASX: FMG) receive fewer Australian dollars when they convert their USD sales. Gold producers like Northern Star (ASX: NST) and Evolution Mining (ASX: EVN) face a similar challenge since gold is priced globally in USD.

Healthcare giants like CSL (ASX: CSL) and ResMed (ASX: RMD) are particularly sensitive because their functional reporting currency is the US dollar. When the Australian dollar strengthens, the billions they earn in the US market translate into fewer Australian dollars for local shareholders, effectively “shrinking” their reported bottom line even if their actual US business is performing well.

For investors holding resource stocks, hedging becomes more important. Many large miners hedge their currency exposure, but the impact still flows through to earnings over time.

The bottom line: the Australian dollar rally looks set to continue as long as the RBA maintains its hawkish stance. Growth-oriented investors may want to tilt towards import-reliant retailers, while those heavily exposed to miners should monitor currency hedging disclosures in upcoming earnings reports.