Australian dollar rebounds as fears od rate cut ease THE Australian dollar was higher today on news of a rebound in business conditions in December weakening the case for another interest-rate cut. National Australia Bank's monthly business-conditions index rose to plus-four in December from minus-three in November signalling a possible turning point for an economy weakened last year by a fading mining investment boom. There were improvements in trading conditions, corporate profitability and, to a lesser extent, hiring, the survey said. The trading conditions subindex jumped to plus-12 from plus-two supported by record-low interest rates, a rising stock market and house prices and steep falls in the Australian dollar last year helping exports. NAB's separate business-confidence index was unchanged in December at plus-six_also boding well for an upturn this year. At 5pm (AEDT) the Australian dollar was trading at US87.76c_up from US87.05c before the weekend. The Reserve Bank would be encouraged by the way the economic recovery is panning out. The low Australian dollar is helping with the structural rebalance across the domestic economy," CommSec chief economist Craig James said. The policy setting board of the Reserve Bank of Australia meets on February 4 and is expected to keep its cash rate at a record low 2.50 per cent. The Aussie dollar was stronger in spite of growing concerns about emerging-market economies_many of who have large external liabilities. In focus are Turkey, South Korea, Argentina, Russia and Brazil. "Concerns about emerging countries on the back of various political problems and trade imbalances that leave them vulnerable as the Fed slows down its monetary stimulus appear to have triggered a correction in sharemarkets," AMP Capital chief economist Shane Oliver said. "While it makes sense to be cautious about emerging-market shares generally a rerun of the 1997-98 Asian crisis is unlikely and emerging markets are unlikely to pose a major threat to global economic recovery," Mr Oliver added. Uncertainty in emerging markets won't derail the recovery in international growth, UBS Australia chief economist Scott Haslem said. "We believe the underpinnings of the global economic recovery remain in place and are unlikely to be dislodged by emerging vulnerabilities," he said. Recent market tumult, above all in emerging currencies, reminds investors that risks remain present. That's no bad thing following a period of uninterrupted gains in global equity markets.