Australia, New Zealand Dollars Fall After Slump in U.S. Stocks

By Tracy Withers

Jan. 12 (Bloomberg) -- The Australian and New Zealand dollars fell after stock declines and a rising U.S. jobless rate reduced appetite for higher-yielding assets.

Unemployment in the U.S. climbed to 7.2 percent in December, the highest level in almost 16 years, adding to signs of a global economic slowdown that reduces risk appetite, according to a Jan. 9 report. The Standard & Poor’s 500 stock index fell 2.1 percent.

“Last week’s weak global data provided a reality check and reaffirmed that the global outlook for 2009 remains dismal,” said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. “Any further losses in global equities should see investors ditch growth-sensitive currencies like the New Zealand dollar.”

Australia’s dollar fell to 70.01 U.S. cents at 8:25 a.m. in Sydney from 70.34 cents in late New York trading on Jan. 9. The currency dropped to 63.11 yen from 63.59.

New Zealand’s dollar declined 0.6 percent to 58.85 U.S. cents from 59.20 cents in Asia yesterday. It traded at 53.07 yen from 53.52 yen on Jan. 9.

The benchmark interest rate in New Zealand is 5 percent, compared with 0.1 percent in Japan and as low as zero in the U.S., making the South Pacific nation an attractive destination for international investors seeking higher returns. Australia’s key lending rate is 4.25 percent.

Weighing on the Australian and New Zealand currencies, the euro fell the most versus the U.S. dollar since October on speculation the European Central Bank will lower interest rates on Jan. 15.

The ECB will cut its target rate by a half percentage point to 2 percent, according to the median forecast of 32 economists surveyed by Bloomberg News.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.