Australian, New Zealand Currencies Advance as Investors Seek Higher Yield

Australia’s dollar rose to a record versus its U.S. counterpart and New Zealand’s dollar gained against most major peers as investors bought higher-yielding currencies on speculation economic growth is improving.

The two South Pacific currencies advanced as U.S. payrolls rose more than forecast, burnishing investor appetite for riskier assets. They also strengthened amid signs Japan will keep monetary policy loose to spur the economy and after data showed China’s manufacturing grew at a faster pace last month. Commodities rose.

“The Aussie is strong because of the commodity picture,” said Alex Sinton, a senior dealer at ANZ National Bank Ltd. in Auckland, New Zealand.

The Australian dollar gained 0.5 percent to $1.0375 at 12:36 p.m. in New York, from $1.0329 yesterday. It touched $1.0389, the highest level since it was first freely traded in 1983. Australia’s dollar climbed as much as 2 percent to 87.60 yen, the strongest level since May 4, before trading at 87.42, from 85.87 yen yesterday.

The kiwi, as the New Zealand dollar is nicknamed, appreciated 0.6 percent to 76.60 U.S. cents, from 76.15 cents. New Zealand’s dollar rose 1.9 percent to 64.52 yen from 63.31 yen. It earlier climbed 2.1 percent to 64.66 yen, the highest level since Nov. 22.

The Reuters/Jefferies CRB Index of raw materials increased as much as 0.5 percent today. It has gained 8.2 percent this year on prospects that strengthening growth worldwide will boost demand for commodities, which account for a majority of Australia and New Zealand’s shipments.

China Index

China’s Purchasing Managers Index rose to 53.4 in March from 52.2 in February, the China Federation of Logistics and Purchasing said. China is Australia’s largest trading partner and New Zealand’s second-biggest export destination.

U.S. employers added 216,000 jobs last month after a revised 194,000 gain in February, Labor Department data showed today in Washington. Economists forecast a gain of 190,000, according to the median estimate in a Bloomberg News survey.

Australia’s dollar rose 1.1 percent against the greenback this week and yesterday completed a third straight quarter of gains, advancing 0.9 percent. The kiwi climbed 1.7 percent since March 25. It dropped 2.4 percent in the first quarter.

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 South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Alexandra Harris in New York at aharris48@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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