Australia, New Zealand Dollars Slip, Greenback Gains on Rescue

By Candice Zachariahs

Sept. 29 (Bloomberg) -- The Australian dollar fell for a second day and New Zealand's currency slipped as U.S. lawmakers said an agreement has been reached on the $700 billion rescue plan for banks, reviving confidence in the greenback.

The currencies dropped as the U.S. dollar rallied the most since Sept. 16 against the euro after Senator Judd Gregg, a New Hampshire Republican and ranking member of the Budget Committee, said yesterday ``the deal is done.'' The Australian and New Zealand currencies were weaker against the yen as concerns about Fortis, Belgium's largest financial-services firm, dulled investor appetite for higher-yielding assets.


``A generally firmer U.S. dollar should limit the top side,'' for the Australian and New Zealand dollars, said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``At this stage it looks like concerns over the European bank may outweigh any optimism and the currencies will remain heavy.''

The Australian dollar fell 0.3 percent to 82.87 U.S. cents at 8:06 a.m. in Sydney from 83.11 cents in New York on Sept. 26. It traded at 88.07 yen from 88.10 yen on Sept. 26.

New Zealand's dollar slipped to 68.53 U.S. cents from 68.60 cents in New York. It bought 72.85 yen from 72.72 yen.

The currencies fell against the U.S. dollar after Senate Majority Leader Harry Reid said the bank-rescue package will be voted on early this week. The House may vote tomorrow, House Speaker Nancy Pelosi said.

New Zealand's dollar pared earlier losses against the yen after Belgium, The Netherlands and Luxembourg said they would invest 11.2 billion euros ($16.3 billion) in Fortis, partly nationalizing the bank in a move to restore investor confidence.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net