Oct. 23 (Bloomberg) -- The Australian and New Zealand dollars headed for their third week of gains on speculation the nations’ central banks will increase interest rates faster than other developed countries.

Australia’s currency approached the highest since August 2008 as Asian stocks rose and a report showed the nation’s export prices fell at a slower pace in the three months through September. New Zealand’s dollar was near the strongest since July 2008 after central bank Governor Alan Bollard said this week a surging currency won’t impede raising borrowing costs.

“Commodity-producing nations such as Australia are considered the most promising in terms of economic growth,” said Toshiya Yamauchi, a Tokyo-based manager at the foreign- exchange margin trading department at Ueda Harlow Ltd. “People are expecting additional rate hikes in Australia.”

Australia’s dollar bought 92.75 U.S. cents as of 4:20 p.m. in Sydney from 92.69 cents in New York yesterday. The currency gained 1.2 percent against the greenback this week. It climbed 2 percent this week to 85.01 yen.

New Zealand’s currency was at 75.67 U.S. cents from 75.78 in New York. It has advanced 2.1 percent this week and on Oct. 21 touched 76.35 cents, the most since July 2008. The kiwi rose 3 percent this week to 69.37 yen.

The Nikkei 225 Stock Average today rose 0.4 percent, and the MSCI Asia Pacific Index of regional shares gained 0.7 percent.

Australia’s export price index slumped 9.6 percent from the second quarter, when it dropped 20.6 percent, the Bureau of Statistics said in Sydney today. Import prices fell 3 percent after dropping 6.4 percent in the previous quarter.

China Growth

Demand for Australia’s dollar may be bolstered after an official in China, its largest trading partner, indicated full- year growth will reach as much as 9 percent, National Australia Bank Ltd. said.

“This implies that fourth-quarter Chinese growth could hit double digits, which would be very supportive of commodity prices and the Australian dollar,” John Kyriakopoulos, head of currency strategy at National Australia in Sydney, wrote in a note to clients today.

New Zealand policy makers meet on Oct. 29 and are expected by all 11 economists surveyed by Bloomberg News to leave the official cash rate unchanged. Bollard said Sept. 10 that he will not raise interest rates until “the latter part of 2010.”

‘Modify the Language’

“Certainly, they won’t raise rates next week, but the question in the market’s mind is to what extent they are going to modify the language,” said Ray Attrill, global research director at Forecast Ltd. in Sydney. “They expect the rates to remain at the present level until the latter half of 2010. That will basically be shifting their bias from easing to neutral.”

Benchmark interest rates are 3.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

The Reserve Bank of Australia on Oct. 6 became the first this year among the Group of 20 nations to raise its overnight cash rate.

Australian government bonds fell for a third day. The yield on the benchmark 10-year note climbed four basis points, or 0.04 percentage point, to 5.71 percent, the highest since August, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.30, or A$3 per A$1,000 face amount, to 96.673.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates and which is sensitive to interest-rate expectations, rose to 4.79 percent, the highest level since December.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Garfield Reynolds in Sydney at greynolds1@bloomberg.net

Last Updated: October 23, 2009 01:50 EDT