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N.Z. Dollar Rises to 6-Month High Versus Yen After Retail Sales

Feb. 15 (Bloomberg) -- The New Zealand dollar rose to a six-month high against the yen after the nation’s retail sales rose more than economists estimated in the fourth quarter.

The Australian and New Zealand dollars gained against most of their 16 major peers after People’s Bank of China Governor Zhou Xiaochuan said his nation will participate in resolving Europe’s debt crisis, spurring investor appetite for higher-yielding assets. The so-called Aussie advanced after a private survey showed Australian consumer confidence rose by the most in three months as two interest-rate reductions late last year improved the financial outlook for households.

“Retail numbers are undoubtedly kiwi supportive,” said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington, using the nickname for the nation’s currency. “We’ll see markets beginning to bring forward the timing of Reserve Bank of New Zealand interest-rate hikes.”

New Zealand’s dollar rose 0.6 percent to 65.78 yen at 2:41 p.m. in Sydney, after earlier touching 65.79, the most since Aug. 8. The kiwi advanced 0.4 percent to 83.74 U.S. cents.

Australia’s dollar strengthened 0.4 percent to $1.0728. The Aussie earlier touched 84.27 yen, the highest level since Aug. 4, before trading at 84.27, 0.5 percent above yesterday’s close in New York.

Retail sales in New Zealand adjusted for inflation rose 2.2 percent in the three months through December from the previous quarter, when they gained a revised 2.4 percent, a report showed today. Sales were forecast to climb 1.2 percent, according to the median estimate in a Bloomberg News survey.

Reserve Bank Policy

Traders are betting New Zealand’s central bank will raise rates by 10 basis points, or 0.10 percentage point, over the next 12 months, according to a Credit Suisse Group AG index based on swaps. On Feb. 6, bets went from a cut to an increase.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose 5 1/2 basis points to 2.92 percent.

RBNZ Governor Alan Bollard has kept the official cash rate at a record-low 2.5 percent since March.

The Aussie and kiwi gained after China’s Zhou said his nation is ready to be more involved in resolving the euro crisis through the European Financial Stability Facility and European Stability Mechanism, echoing comments made yesterday by Premier Wen Jiabao at a joint press conference with European Union President Herman Van Rompuy.

In Australia, the consumer sentiment index for February advanced 4.2 percent to 101.1, the highest since November, a Westpac Banking Corp. and Melbourne Institute survey taken Feb. 6-10 of 1,200 consumers showed today in Sydney.

Australia’s government bonds fell, pushing the yield on the 10-year security up two basis points to 4.02 percent.

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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