The Australian dollar is becoming increasingly attractive to foreign central banks and sovereign wealth funds as they try to reduce their exposure to underperforming US and European currencies.

Russia's central bank has flagged it may begin adding Australian dollars to its foreign currency reserves as early as February.

The country is estimated to hold about half a trillion dollars worth in currency reserves, mostly in US dollars, euros and British pounds.

It announced in 2011 it was looking to diversify its holdings as confidence waned in the "safe haven" European and US currencies.

The Russians are expected to shift about one per cent of their portfolio to Australian dollars.

Commonwealth Bank currency strategist Joseph Capurso said Russia's move was reflective of a growing interest among central banks in the Australian dollar.

"It signals that another central bank is interested in the Australian dollar and putting their money with us," he said.

"Russia certainly isn't the first and certainly isn't going to be the last central bank to be looking at Australia."

However Russia's change in its foreign currency holdings is not expected to provide a major boost to the Australian dollar, which is trading around 106 US cents.

The daily turnover of Australian dollars on world foreign exchange markets is about $150 billion.

With more than $US10 trillion worth of currencies held in reserves globally, central banks are becoming increasingly important players in currency markets.

AMP chief economist Shane Oliver said the Australian dollar was undergoing a long-term structural shift, with higher average prices and a greater ability to withstand falls in global confidence.

"Some of these structural factors like central bank buying provide a source of support for it," he said.

"An example of that is last year, the Aussie share market was down, most global share markets were down, commodity prices were down but the Aussie dollar was pretty much unchanged."

He said while the European and US economies continued to struggle Australia had the benefit of a AAA credit rating, strong commodity prices, liquid currency exchange markets, and proximity to Asia.

As a result the Australian dollar was likely to trade higher, on average, for the next five years.

"I think the reality in Australia is that we should get used to the fact that the trend in the Aussie dollar has changed," Mr Oliver said.

"The Aussie dollar is likely to stay here for the next five or 10 years."