The Australian currency rose against most of its major counterparts, as investors sought the South Pacific nation’s assets amid the uncertainty on how the euro region’s debt crisis will affect the global economy.
The Aussie reached its highest point in more than a month after Treasury Secretary Martin Parkinson said the country has scope to respond to an economic shock from Europe. German Chancellor Angel Merkel said yesterday the next Greek government shouldn’t be granted additional budget leeway amid surging 10-year yields on Spanish bonds. The New Zealand dollar strengthened for a third day.
“We can see the Australian economy hasn’t been dealt as much of a blow as currencies that traded a lot more frequently with the euro zone,” Ravi Bharadwaj, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co., said in a telephone interview. “It’s probably just a case of the currency starting to reflect its domestic economic developments.”
Australia’s dollar gained 0.7 percent to $1.0124 yesterday in New York. The currency traded 0.9 percent stronger at 80.09 yen.
New Zealand’s dollar climbed 0.5 percent to 79.19 U.S. cents. It rose 1 percent to 62.66 yen.
The Standard & Poor’s GSCI Index of 24 raw materials decreased 0.2 percent after Spanish 10-year yields rose as much as 41 basis points to 7.29 percent. Greece, Ireland and Portugal sought bailouts when their benchmark borrowing costs topped 7 percent.
Parkinson said Australia can cope with economic shocks from Europe as “our banks are well-capitalized and have sufficient resources to withstand a freeze in international capital markets for several months” and “our main trade links are with the emerging Asian economies.”