Retailers are experiencing a mixed bag. Imports have never been cheaper, but we are buying more directly from overseas.

The Australian dollar is doing some of the interest rate legwork on behalf of the RBA - but causing even bigger divisions in our economy.

YOU wouldn't want to be in the tourism industry with our dollar at current levels, nor be a manufacturer with little alignment to the resources sector. The education system is taking a big hit too, and it was our third largest export behind coal and iron ore in 2009. That has changed.

Retailers are experiencing a mixed bag from our soaring currency too. Imported goods have never been cheaper, but we are also buying more directly from overseas because that little extra something is particularly cheap in any currency but ours.

For households, the record high dollar is also keeping a lid on petrol prices - even though at the eye-watering Easter pump levels it probably doesn't feel like it - and it's making overseas travel far more appealing than holidaying locally (that's the double-whammy for the local tourism industry).

It's also delivering record low prices for electrical goods and gadgets, and close to record lows for leather, travel goods, furniture, toys and sporting goods, according to CommSec economist Savanth Sebastian.

Deutsche Bank senior economist Phil O'Donaghoe says the rising dollar has also been a big factor in keeping interest rates on hold, which is good for the housing market but has almost completely excluded overseas property buyers.

On the other side of the coin, the attraction of overseas property for local buyers has never been so compelling. For example, the average price of a three-bedroom house in the city centre of Sheffield in England right now is £146,226 - that's around $A225,000 at current exchange rates. These types of houses start in Sheffield at around £62,500 - about $A96,000.

Anyone who has looked at local property prices lately will know that you can't buy anything like this in any city centre in Australia for less than double this amount. This reflects both our soaring currency and also that property prices in many other countries such as Britain have taken a hit since the global financial crisis.

The dollar is at post-1983-float record levels against the US greenback and while it hasn't risen as sharply against many other currencies, it is still at close to record levels against most of them.

As Deutsche's Mr O'Donaghoe says, our soaring currency is now a huge factor in the Australian economy.

''Tourism has been absolutely killed,'' he says. ''The two-speed economy that was already evident before the Aussie dollar started to run is now even more distinct. Everything not aligned with the mining sector is really feeling a lot of pressure; it's really struggling at the moment.''

Mr O'Donaghoe says the Reserve Bank is also now likely to keep interest rates on hold for the next six months, in part because the rising currency is putting a brake on local inflation by keeping import prices down. ''We're importing deflation, so you could say the Aussie is doing a lot of the work for them.''

CommSec's Mr Sebastian predicts import prices of many goods will continue to fall. ''Given the Aussie dollar is likely to hold well above parity over the next couple of months, a further fall in import prices is a possibility,'' he says.

''Import prices tend to respond to the movements in the Aussie dollar with a lag effect and the recent lift in the Aussie has not been fully reflected in already low import price data.''

But Mr O'Donaghoe says the run in the Aussie cannot last - in part because the huge chunks of the Australian economy that are being crippled will eventually bring the currency and the economy back down with a thud.

''It would be reckless to suggest the latest run will keep going,'' he says. ''What we have seen in the past week or so has been more about US dollar weakness than Aussie dollar strength, and the US economy is getting stronger and things are picking up there.

''There are now major parts of the Australian economy that are severely hampered. The Aussie dollar is at a record 107 US cents now, but I will be very surprised if it is not lower than that by the end of the year.''

Why the $A is climbing

- Our interest rates are relatively high and our economy relatively strong.
- The US is busy printing shed-loads of money to boost its economy.
- The $A is the fourth-largest traded currency in the world, as it is seen as a proxy bet on China, which is still booming.
- The recent run has been essentially due to $US weakness, - the greenback is at record lows.
- This weakness was triggered by news early last week that ratings agency Standard & Poor's had placed the US's much-prized AAA credit rating - the highest you can get - on "negative watch".
- This was the first time a "negative watch" has been placed on the US, which has never been downgraded.