Australian, New Zealand Dollars Fall on Global Growth Concerns

By Candice Zachariahs

Oct. 2 (Bloomberg) -- The Australian dollar fell for the seventh day and New Zealand's also declined on concern the U.S. bailout won't stop the world's biggest economy sliding into recession, prompting investors to sell higher-yielding assets.

The currencies also fell against the yen as U.S. manufacturing contracted in September at the fastest pace since the last recession, signaling global economic growth will slow. The Australian and New Zealand dollars have dropped more than 10 percent against the dollar in the past three months as prices of commodities the two nations export declined.

``The market is viewing all this as bad news for global growth and commodity prices are under pressure,'' said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney. ``There's still a lot of uncertainty surrounding the U.S. financial system.''

The Australian dollar fell 1.4 percent to 78.93 U.S. cents as of 7:30 a.m. in Sydney from 80.05 cents in late Asian trading yesterday. It touched 78.58 cents, the weakest level since Sept. 18. It declined 1.7 percent to 83.46 yen from 84.93 yesterday.

New Zealand's dollar weakened 0.9 percent to 67.19 U.S. cents from 67.77 cents late in Asia yesterday. It slipped 1.04 percent to 71.14 yen.

The currencies declined as Democratic and Republican leaders predicted that the U.S. financial rescue would win approval in the Senate and urged opponents in the House to drop their objections to the bill.

``If this package passes through we can expect the aussie to get a bit of a boost,'' Cavenagh said, referring to the currency by its nickname.

The New Zealand and Australian dollars also fell as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials slid yesterday. Crude oil, Australia's fourth-most valuable export fell in New York trading after the U.S. government said supplies increased more than expected as fuel consumption dropped to the lowest since 2001.

Raw materials account for 60 percent of Australia's exports, and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments.

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