July 25 (Bloomberg) -- The Australian dollar fell against the yen and Swiss franc as stocks dropped amid concern U.S. President Barack Obama and Congress will fail to agree on raising the federal debt limit.
The Aussie also declined after Moody’s Investors Service cut Greece’s sovereign credit rating and said the European Union’s financing package for the nation implies “substantial economic losses” for private creditors. New Zealand’s currency traded at almost a record high versus the greenback before the central meets on July 28 amid speculation Governor Alan Bollard will signal interest rates will increase this year.
“The deadline for the U.S. debt ceiling is approaching and the solution still remains quite elusive so there’s potentially some risk around currencies as that date looms large,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. Australia’s currency will remain under pressure against the yen and Swiss franc as risk aversion emerges, she said.
Australia’s currency fell 0.1 percent to 85.20 yen at 12:46 p.m. in New York from 85.23 last week. It rose 0.2 percent against the dollar at $1.0872. The Aussie fell 1.4 percent against the Swiss franc to 87.66 centimes.
New Zealand’s dollar rose 0.3 percent to 86.69 U.S. cents from 86.45 on July 22, when it touched 86.75 cents, the most since it was freely floated in 1985. The kiwi traded at 67.92 yen from 67.91.
Republicans and Democrats pushed dueling plans for raising the U.S. debt ceiling to avert a default. House Speaker John Boehner, an Ohio Republican, prepared to force action on a shorter-term extension of the U.S. debt limit than Obama has requested, defying a veto threat and the administration’s warnings of dire economic consequences. Treasury officials project the debt limit will be exhausted Aug. 2.
The MSCI Asia Pacific Index of stocks fell 0.9 percent. The Standard & Poor’s 500 Index fell 0.4 percent.
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