Australia, New Zealand Dollars Tumble to Lowest This Year on Risk Aversion

The Australian and New Zealand dollars dropped to the weakest this year against the greenback and the yen as concerns about the impact of the nuclear disaster in Japan spurred investors to sell riskier assets.

The so-called kiwi dollar declined against 15 of its 16 most-traded peers as the risk of radiation leaks from crippled nuclear plants north of Tokyo stoked speculation Japan’s insurers and investors will sell overseas assets to pay for damages. Australia’s dollar dropped 5.6 percent versus the yen since March 11, heading for its biggest weekly slide since May.

“The markets are in a panic and everyone’s diving into the havens of the yen and the Swiss franc,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “When you’re seeing this amount of volatility that’s usually bad for so-called risk currencies like the Aussie and the kiwi.”

The Australian dollar fell to as low as 97.06 U.S. cents, the least since Dec. 2, before trading at 97.86 cents as of 10:18 a.m. in Sydney. The Aussie tumbled 2.1 percent to 76.68 yen, after reaching as low as 74.48, the weakest since August.

The kiwi slid to 71.18 U.S. cents, a six-month low, before trading at 71.98 cents. The New Zealand currency dropped as much as 5.4 percent to 54.81 yen, the weakest since April 2009.

The declines haven’t been as deep as the drops experienced in previous financial-market crises surrounding Greece’s sovereign-debt problems last year and the collapse of Lehman Brothers Holdings Inc. in 2008, Capurso said.

“We’re still a fair way short of the sort of sell-offs that happened after the Greek and Lehman crises,” he said.

Benchmark interest rates are 4.75 percent in Australia and 2.5 percent in New Zealand, compared with as low as zero in the U.S. and Japan, attracting investors to the nations’ higher- yielding assets. The risk is that sudden exchange-rate moves can erase profits.

To contact the reporter on this story: Garfield Reynolds at greynolds1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net;

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.