The Australian dollar was trading near record highs Tuesday as strong prices for materials and the possibility of a rate hike Down Under buoyed the currency.

One Australian dollar would buy 89.76 U.S. cents, up from 89.25 cents late Monday. The currency hit a peak of 90.2 cents midway through the Monday session before retreating.

The last time the Aussie dollar was this strong was back in 1989. The CurrencyShares Australian Dollar Trust ( FXA) exchange-traded fund, which tracks the value of the Australian currency, was recently rising 0.7%.

The currency has been strong due to the high price of commodities, which has boosted exports from the resource-rich economy, explains Meg Browne, senior currency strategist at Brown Brothers Harriman in New York.

The country's proximity to China, which needs vast quantities of metals and other mined materials to fuel economic growth, has been an added advantage. And there is also the possibility that the Australian government may increase the cost of borrowing, making the currency more attractive to foreign exchange investors, she says.

In other currencies, the U.S. dollar was selling for 116.89 Japanese yen, down from 117.41 yen a day earlier. The British pound would buy $2.032, down from $2.0354 previously.

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