Nov. 2 (Bloomberg) -- Australia’s dollar is heading toward parity with the U.S. currency for the first time as investors hungry for China’s economic growth buy into the world’s biggest exporter of iron ore used in making steel.

The so-called Aussie has soared 35 percent the past 12 months, more than any other currency tracked by Bloomberg. Citigroup Inc., Calyon, Barclays Capital and National Australia Bank Ltd. forecast it will trade at 1 U.S. dollar next year, implying an additional 11 percent gain. Hedge funds and other large traders have more bets than anytime since July 15, 2008, that the rally will continue, data from the Washington-based Commodity Futures Trading Commission show.

China expanded 8.9 percent in the third quarter, the fastest pace in a year, fueling demand for Australia’s exports of iron ore, wool, coal and wheat. Reserve Bank of Australia Governor Glenn Stevens last month became the first Group of 20 policy maker to raise interest rates this year to curb inflation. He will increase them again tomorrow, according to all 22 economists surveyed by Bloomberg News.

“Australia will benefit from its trade relationship with Asian economies, especially China,” said Masataka Horii, one of four investors for the $48 billion Kokusai Global Sovereign Open, Asia’s biggest bond fund. “They export iron, gold, copper

To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net

Last Updated: November 2, 2009 11:24 EST