Australia’s dollar fell, extending its biggest weekly decline against the yen since November, after China raised the reserve ratio requirement for banks and as flooding sapped the South Pacific nation’s outlook for growth.
The Australian currency weakened against 14 of its 16 most-traded counterparts after Anna Bligh, premier of the flood-ravaged Queensland state, said it’s unlikely the central business district of Brisbane will be fully operational until next week. The city is the nation’s third-largest. The New Zealand dollar dropped from a seven-week high versus the yen as China tightened liquidity.
“The Aussie was in the midst of selling off and the reserve requirement announcement came from China and kicked the can a little further down the road,” said Greg Anderson, a currency strategist at Citigroup Inc. in New York. “The market was not expecting this move until later in January, so the can got kicked a little harder.”
Australia’s dollar fell 0.9 percent to 81.86 yen at 10:56 a.m. in New York, from 82.62 yen yesterday. It slid 1.2 percent for the week. The Aussie depreciated 0.9 percent to 98.83 U.S. cents, from 99.76 cents, extending a weekly loss to 0.7 percent.
The New Zealand dollar weakened 0.5 percent to 63.55 yen, after rising to 64 yen earlier today, the strongest level since Nov. 23. The kiwi gained 0.6 percent for the week. The New Zealand currency dropped 0.5 percent to 76.75 U.S. cents, trimming its weekly gain to 1 percent.
Reserve ratios will increase by 50 basis points starting Jan. 20, the People’s Bank of China said on its website today. One basis point is 0.01 percentage point. China is Australia’s largest trading partner and New Zealand’s second-biggest export market.
China overtook the U.S. last year as the world’s biggest economy when measured in terms of purchasing power, according to Arvind Subramanian, senior fellow at the Peterson Institute for International Economics in Washington.
The Thomson Reuters/Jefferies CRB index of raw materials declined 0.5 percent today and the MSCI World Index was little changed after dropping as much as 0.5 percent.
The Port of Brisbane said the nation’s third-busiest container ship harbor remains closed because of strong currents and debris from the floods that have swept across the state.