Australian, N.Z. Dollars Drop Versus Yen on Slowing Growth, Falling Stocks
The Australian and New Zealand dollars declined against the yen for the first time in five days as concern increased that global economic growth will slow and Asian stocks failed to extend a four-day rally.
The so-called Aussie is poised for a fourth month of losses versus the yen and also weakened against the dollar in August. New Zealand’s currency fell against all 16 of its most-traded peers today after a survey by ANZ National Bank Ltd. showed business confidence declined this month.
“World growth is slowing and that is going to be an overall drag on commodity currencies and equity markets,” said Tony Allen, global head of foreign-exchange trading in Sydney at Australia & New Zealand Banking Group Ltd. “The Australian and kiwi dollars are closely following equity moves at the moment.”
Australia’s dollar declined to 81.73 yen as of 11:41 a.m. in Sydney from 81.98 yen in New York yesterday, headed for a 3.1 percent monthly drop. The currency fetched $1.0666 from $1.0683 yesterday and $1.0993 on July 29. New Zealand’s dollar slid 0.4 percent to 65.23 yen and has lost 3.4 percent this month. It fell to 85.11 U.S. cents from 85.31 yesterday.
The Aussie may weaken to $1.0630 and the kiwi may reach 84.80 cents, Allen said.
The MSCI Asia Pacific Index of stocks was little changed.
A net 34.4 percent of companies surveyed in New Zealand expect the economy will improve over the next 12 months, down from 47.6 percent in July, according to the ANZ National Bank survey released today. The net figure subtracts the number of pessimists from the number of optimists.
Benchmark 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.
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