Australia, New Zealand Dollars Rise From Near 2-Week Lows

By Candice Zachariahs

Feb. 19 (Bloomberg) -- The Australian and New Zealand currencies rose from two-week lows against the U.S. dollar as Asian equities gained and President Barack Obama pledged $275 billion to help stem home foreclosures.

Australia and New Zealand’s dollars strengthened versus the yen on speculation Japan’s exporters will be helped by a falling currency. Japanese investors were net buyers of foreign bonds during the week ended Feb. 14 and the yen has fallen against 14 of the 16 most-actively traded currencies in the past five days.

“Everyone is trying to digest all the stimulus packages in the U.S. and potentially what it means for Australia,” said Charles Wiggins, corporate risk manager at Custom House Global Foreign Exchange in Sydney. “We’re starting to find a relative level where the Australian dollar is going to swing back and forth on the 64-cent mark.”

Australia’s currency rose 0.5 percent to 64.14 U.S. cents as of 12:36 a.m. in Sydney from 63.80 cents late in Asia yesterday. It touched 63.40 cents, close to yesterday’s two-week low of 63.34. The currency advanced 1.5 percent to 59.98 yen.

New Zealand’s dollar rose 0.2 percent to 51.14 U.S. cents and traded as low as 50.76. It bought 47.83 yen from 47.28.

Australia’s dollar will struggle to rise above 64.30 cents, Wiggins said.

“In this current environment of increased risk aversion investors are not taking a huge punt on the kiwi in either direction,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington, calling the currency by its nickname.

Risk Aversion

The U.S. said yesterday it will use $75 billion to reduce monthly payments for borrowers and help homeowners with loans owned or backed by Fannie Mae and Freddie Mac to refinance at lower rates. Obama will double to $200 billion funding available for Fannie and Freddie to buy loans.

Federal Reserve officials lowered their projections for economic growth this year, with most seeing a contraction of 0.5 percent to 1.3 percent, according to minutes of the Federal Open Market Committee meeting in January released yesterday.

Australian banks’ credit ratings will be reviewed by Moody’s Investors Service as the nation’s economy deteriorates more than previously forecast. The New York-based ratings company said the assessment is needed because it expects Australia’s economy will contract 0.4 percent in 2009 with unemployment peaking at 7.2 percent in the third quarter of 2010.

“Moody’s will consider the potential impact on asset quality and earnings -- and how this may affect Australian bank financial strength ratings,” it said in a statement yesterday.

Australian government bonds fell, pushing the yield on the 10-year note up 12 basis points to 4.2 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slid 1.02, or A$10.2 per A$1,000 face amount, to 108.57.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.27 percent from 3.23 yesterday.

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