Sept. 15 (Bloomberg) -- The Australian dollar may decline for a third day this week as falling copper and nickel prices damp the outlook for export growth in Asia-Pacific's fifth- largest economy.

Copper prices fell in New York for a sixth day in seven and nickel prices dropped for a second session. Australia's currency is closely tied to the price of metals because global sales of raw materials contribute about 10 percent to economic output.

``There's a risk of weakness in the Australian dollar in the next couple of days,'' said John Horner, a currency strategist at Deutsche Bank AG in Sydney. ``Any decline in commodity prices is bearish for the Australian dollar.''

Australia's currency bought 77.01 U.S. cents at 9:41 a.m. in Sydney from 77.07 cents in late Asian trading yesterday. It reached 77.68 U.S. cents Sept. 12, the highest since June 23.

Copper prices fell as inventories climbed for a second day, spurring speculation demand will slow for the metal used in cars, homes and appliances.

Copper futures for December delivery fell 0.9 percent to $1.611 a pound on the Comex division of the New York Mercantile Exchange. Prices have dropped 3.7 percent since Sept. 2. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.

Australia is the world's fourth-biggest producer of copper, which had a 0.83 correlation with the currency in the past three years. A reading of 1 suggests the two move lock-step.

Slower Growth

Nickel prices dropped 2.5 percent to $13,975 a metric ton on the London Metals Exchange. The Reuters/Jefferies CRB index of 19 commodities has dropped 4.3 percent this month.

``We see the risk of a lower Australian dollar as commodity prices turn,'' Peter Jolly, head of research at National Australia Bank Ltd., said in Sydney. National Australia Bank forecasts the Australian dollar will decline to 75 U.S. cents by the end of the year.

Raw materials make up almost 60 percent of Australia's export earnings. Reserve Bank of Australia Governor Ian Macfarlane is counting on rising Australian exports to help fuel economic growth amid a slowdown in consumer spending and housing.

Australian economic growth rate will slow this year, the International Monetary Fund said this week. The economy will expand 2.2 percent in 2005, after growing 3.2 percent the previous year, the IMF said in a report released in Washington on Sept. 12.

To contact the reporter for this story: Victoria Batchelor in Sydney at vbatchelor@bloomberg.net.

Last Updated: September 14, 2005 19:44 EDT