Australia's dollar is emerging more like a ''safe haven'' asset, with currency continuing to strengthen in the wake of heightened volatility across global financial markets.

Fears of another Gulf war looming amid growing instability in Iraq has battered market sentiment and spurred buying of assets traditionally considered ''safe'', such as gold and US Treasury debt.

But the Aussie - which investors have long treated as a ''risk'' asset, ditching it in times of uncertainty and unrest - has continued to rise, perplexing economists and currency strategists.

''There's certainly something going on,'' HSBC chief economist Paul Bloxham said. ''There's a different kind of behaviour around the Aussie dollar than there has been in the past. It is being treated more like a safe haven asset.''

Mr Bloxham backed his theory on the number of foreigners who are holding Australian government bonds or investing in the local currency. The March quarter marked the third successive quarter that overseas investors were big buyers of Australian Commonwealth government bonds, with purchases leaping $13.3 billion - the biggest quarterly jump in two years.

Much of the Aussie's appeal to foreigners, which own about 67 per cent of Australian government bonds, centres on this being one of only 10 countries that have maintained a triple-A rating by all three big rating agencies, Mr Bloxham said. And Australia has the best interest rate, at 3.8 per cent, for 10-year bonds, compared with other countries that have a triple-A rating.

''In a comparative sense we are doing very well,'' Mr Bloxham said. ''We still have fairly low levels of government debt. Indeed, we have a government that is seeking to make sure that that's maintained in the future as well.

''The Australian economy is growing strongly on the latest numbers. And we still have central banks across the world that are printing money.''

The Aussie's resilience comes as the European Central Bank left the door open for quantitative easing for the first time after introducing some unusual measures to bolster the economy, which included cutting the deposit rate for banks from 0 per cent to -0.1 per cent this month.

Mr Bloxham said such moves would continue to support the Aussie. ''It's certainly the case that more unconventional policy from central banks is likely to put further upward pressure on the Aussie dollar.

''I think what we are talking about is a fairly medium-term story, so I think it is sustainable.''

But NAB global co-head of FX strategy Ray Attrill said the Aussie was ''living on borrowed time'' above US94¢ and if there was a big jolt to risk aversion the currency would weaken. ''Certainly, it's still the case that the Aussie dollar tends to trade strongly when risk appetite is strong and poorly when risk appetite is more adverse, so it's a bit of a conundrum there,'' he said.