Australia, N.Z. Dollar Still Attractive, Rogers Says

By Shamim Adam and Catherine Yang

Sept. 10 (Bloomberg) -- The Australia and New Zealand dollars, the worst performers this quarter among the world's major currencies, will likely recover after the unwinding of the carry trade ends, said investor Jim Rogers.

``I still own the Australian dollar,'' Rogers told Bloomberg Television. ``I'm not thinking of selling it because if I'm right, the reversal of the carry trade is not going to last forever, it will last for a while. The Australia, New Zealand currencies are still two of the better currencies in the world longer term.''

The two currencies, favorites of so-called carry trades where investors get funds in a country with low borrowing costs and invest in one with higher interest rates, have dropped as slumping commodity and equity prices slashed demand for the countries' high-yielding assets.

Australia has a benchmark interest rate of 7 percent, while New Zealand's official cash rate is at 8 percent. In comparison, the Japan's key borrowing cost is 0.5 percent.

The Australian dollar has fallen 18 percent in eight weeks since reaching a 25-year high on July 16 and fell below 80 U.S. cents today for the first time since August 2007. New Zealand's dollar is trading near a two-year low.

Rogers, who correctly predicted the start of the commodities rally in 1999, said he is buying ``main victims of the carry trade,'' such as the Japanese yen and the Swiss franc. He also favors the Chinese yuan and the Singapore dollar, and expects the U.S. dollar to continue to strengthen.

Dollar's Rally

``I'm waiting for the dollar to continue to rally so I can sell dollars,'' Rogers said. ``The dollar recovery is certainly taking place and has ways to go -- a few weeks, a few months, maybe another year or so that the dollar could recover because it was beaten down so much.''

Rogers, chairman of Singapore-based Rogers Holdings, said he is still optimistic that commodities such as oil will rise over the longer term. Crude prices have dropped 29 percent since reaching a record $147.27 a barrel on July 11.

``It's not the end of the bull market because nobody's discovered any oil,'' he said. ``The global recession could have an effect on demand.''

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net; Catherine Yang in Hong Kong at cyyang@bloomberg.net