By Candice Zachariahs
Sept. 19 (Bloomberg) -- The Australian and New Zealand dollar rose for a third day against the yen as speculation the U.S. will create an agency to support financial companies increased investors' appetite for higher-yielding assets.
The currencies gained after U.S. stocks rallied the most in six years as U.S. Senator Charles Schumer proposed forming an agency to inject funds into financial companies in exchange for equity stakes and pledges to rewrite mortgages and make them more affordable.
``There was a big rally in the U.S. stock market on the back of proposals which have been aired,'' said Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney. ``It has helped relatively those currencies which tend to benefit from risk appetite such as the Australian dollar.''
The Australian dollar rose 0.4 percent to 84.76 yen at 8:33 a.m. in Sydney from 84.41 yen in late Asian trading yesterday. The Aussie, as the currency is called, fell 0.4 percent to 80.33 U.S. cents from 80.66 cents yesterday.
New Zealand's dollar rose 0.3 percent to 71.18 yen from 70.96 yen late in Asia yesterday. It fell 0.5 percent to 67.47 U.S. cents from 67.80 cents.
The Australian currency rose versus the yen as the VIX volatility index, a Chicago Board Options Exchange gauge reflecting expectations for stock market price changes and a barometer of risk aversion, fell from an almost six-year high of 36.22 on Sept. 17 to 33.10 yesterday.
Interest rates are 7 percent in Australia and 7.5 percent in New Zealand, compared with 0.5 percent in Japan and 2 percent in the U.S., making the nations' assets favorites with investors seeking higher returns.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
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