The Australian and New Zealand dollars reached two-week highs against their U.S. counterpart after six developed-nation central banks acted to make more funds available to lenders as Europe’s crisis threatens global economic growth.
The South Pacific currencies gained earlier after China cut the amount of cash that banks must set aside as reserves for the first time since 2008, increasing demand for higher-yielding assets. The Aussie gained for a fifth day versus the yen, the longest stretch in more than a month, as business investment rose more than economists forecast in the third quarter.
“It’s a way of alleviating the problem,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York, referring to the central banks’ coordinated action. “This is about couching confidence in the best way they possibly can, which is good for risk.”
Australia’s dollar rose 2.4 percent to $1.0243 at 12:14 p.m. in New York and touched $1.0328, the strongest level since Nov. 14. The Aussie strengthened 2 percent to 79.49 yen after reaching 80.04 yen, the highest since Nov. 9. Its last five-day winning streak against Japan’s currency ended Oct. 10.
New Zealand’s dollar, nicknamed the kiwi, gained 2 percent to 77.65 U.S. cents and reached 78.23, the highest level since Nov. 14. It appreciated 1.6 percent to 60.25 yen.
Stocks climbed, with the MSCI World Index up 3.3 percent.
Dollar Swap Lines
The Federal Reserve and five other central banks agreed to reduce the interest rate on dollar liquidity swap lines and extend their authorization through Feb. 1, 2013. The rate was cut to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, the Fed said in a statement in Washington. The Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank are part of the coordinated move, the Fed said.
The People’s Bank of China separately said reserve ratios will decline by 50 basis points effective Dec. 5. The move may add 350 billion yuan ($55 billion) to the financial system, according to UBS AG.
Australia’s statistics agency said private capital expenditure rose 12.3 percent in the three months through September. The median forecast in a Bloomberg News survey of economists was for an 8 percent increase.
The kiwi climbed for a third day against the dollar after home-building permits increased 11.2 percent from September, when they slumped 17.2 percent, Statistics New Zealand said today.