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Aussie Touches 5-Year Low Versus Kiwi Before RBA’s Lowe Speaks

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Nov. 25 (Bloomberg) -- Australia’s dollar slid to a five-year low versus the New Zealand currency before the bigger nation’s Reserve Bank deputy governor speaks tomorrow amid speculation his central bank will curb strength in the currency.

The Aussie touched a 2 1/2-month low against the U.S. dollar. Last week, Reserve Bank of Australia Governor Glenn Stevens said he remains “open-minded” on currency intervention. New Zealand’s kiwi gained against all 16 major peers as swap rates climbed to a two-year high amid bets the nation’s central bank will raise borrowing costs next year.

“The RBA’s stance of containing currency strength is very clear, so some caution is needed” against remarks from RBA speakers, said Kengo Suzuki, the Tokyo-based chief currency strategist at Mizuho Securities Co., a unit of Japan’s third-biggest financial group by market value. Aussie-kiwi may fall further “when the prospects for a New Zealand rate hike get clearer next year.”

Australia’s currency weakened 0.7 percent to NZ$1.1132 as of 5:40 p.m. in Sydney after earlier touching NZ$1.1125, the lowest since October 2008.

The Aussie retreated 0.6 percent to 91.31 U.S. cents after touching 91.22, the weakest since Sept. 6. It slumped 2 percent last week, the most since the period ended Aug. 2. The kiwi rose 0.1 percent to 82.03 U.S. cents after losing 1.7 percent last week.

Two-year swap rates in New Zealand climbed three basis points, or 0.03 percentage point, to 3.68 percent, a level not seen since August 2011. The Reserve Bank of New Zealand may start to raise the benchmark rate from 2.5 percent by June next year, according to economist estimates compiled by Bloomberg.

Bond Yields

The yield on Australia’s 10-year government note declined four basis points to 4.28 percent. It touched 4.35 percent at the end of last week, the highest since November 2011.

Australia’s currency has slumped 7 percent in the past six months, the worst performer among the 10 developed currencies tracked by the Bloomberg Correlation-Weighted Currency Indexes. The kiwi has advanced 0.4 percent.

RBA Deputy Governor Philip Lowe will deliver a keynote address at a conference tomorrow in Sydney. He said on Oct. 24 that the depreciation of the Aussie since April is a “welcome development” and that a further depreciation would be helpful in rebalancing growth in the economy.

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net

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