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Australian Dollar Gains for Quarter on Domestic Economy

Australia’s dollar advanced for a second straight quarter against its U.S. counterpart as signs of improvement in the domestic economy eased concern that a slowdown in China will curb demand for resource exports.

The Aussie rose from a two-month low this week after figures showed new home sales increased and bank borrowing rose in the South Pacific nation. New Zealand’s dollar advanced as Asian stocks erased an earlier decline, bolstering demand for currencies linked to global growth.

“I’m bullish on the Australian dollar for the medium term,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency-margin company. “I don’t expect to see a sudden slump” in Australia’s economy.

The Australian currency slipped 0.1 percent to $1.0372 at 1:10 p.m. in New York, trimming its first-quarter advance to 1.6 percent. It lost 0.9 percent this week and fell 3.4 percent in March.

The New Zealand dollar, known as the kiwi, gained 0.4 percent today to 82.03 U.S. cents. It climbed 5.6 percent from January through March, after dropping 1.7 percent this month and rising 0.3 percent this week.

From October through December 2011, the Australian dollar climbed 5.7 percent and the kiwi strengthened 2.1 percent.

The MSCI Asia Pacific Index of stocks increased 0.2 percent this week, and the MSCI World Index added 0.3 percent.

Loans provided by Australian banks and finance companies gained 0.4 percent last month from January, the most since September, according to figures from the central bank today. A report from the Housing Industry Association showed new home sales rose in February for the first time in three months, increasing 3 percent.

Australian Central Bank

The Reserve Bank of Australia, whose benchmark interest rate is 4.25 percent after being cut in November and December, is scheduled to hold a policy meeting on April 3.

“Lower interest rates may finally be leading to rising credit growth and better demand for new housing,” Spiros Papadopoulos, senior economist at National Australia Bank Ltd., wrote in an emailed note. Recent economic reports “suggest the RBA can afford to wait another month and does not need to rush into another interest rate cut next week.”

China, Australia’s biggest trading partner and New Zealand’s second-largest, is scheduled to release a purchasing managers index for manufacturing on April 1, with economists surveyed by Bloomberg News predicting a reading of 50.6 for March, compared with 51 in February. A flash reading of a separate, private gauge came in at 48.1 on March 22, below the 50 level that divides expansion from contraction.

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