Bloomberg News

Aussie, Kiwi Dollars Fall as European Debt Concern Damps Demand

June 08, 2011

June 8 (Bloomberg) -- The Australian and New Zealand dollars fell as lingering concern about Europe’s debt crisis and the U.S. economy damped demand for growth-sensitive currencies.

The Aussie and kiwi declined against the majority of their 16 most-traded counterparts after the International Monetary Fund said its 26 billion-euro ($38 billion) loan to Portugal “entails important risks.” The currencies also fell as stock losses sapped demand for higher-yielding assets.

“Europe’s situation is grave even though people have been rather optimistic,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “Commodity currencies are losing momentum with the U.S. economy slowing.”

Australia’s dollar fell 1 percent to $1.0613 at 11:15 a.m. in New York, from $1.0721 yesterday. The Aussie dropped 1.3 percent to 84.78 yen, from 85.87.

New Zealand’s dollar declined 0.6 percent to 81.54 U.S. cents from 82.05. It touched a record 82.64 U.S. cents on May 31. The kiwi fell 0.9 percent to 65.11 yen.

The MSCI World Index fell 0.6 percent.

The measures attached to the loan for Portugal “may fail to alleviate sovereign debt concerns, with an adverse impact on government financing prospects,” IMF staff wrote in a May 17 report that was posted on the fund’s website yesterday.

U.S. Recovery

Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank should maintain record monetary stimulus to boost an “uneven” and “frustratingly slow” recovery in the economy.

The Reserve Bank of Australia yesterday held interest rates unchanged and said current policy settings are appropriate. The Reserve Bank of New Zealand is forecast to keep its benchmark rate at 2.5 percent tomorrow, according to all 15 economists surveyed by Bloomberg News.

Data showed today that Australia’s home loans gained 4.8 percent in April following a revised 1.1 percent decline in March. Employers added 25,000 jobs in May after cutting 22,100 in April, while the jobless rate was unchanged at 4.9 percent, according to the median estimate of economists in a Bloomberg survey before the statistics bureau data tomorrow.

--With assistance from Allison Bennett in New York. Editors: Paul Cox, Dennis Fitzgerald

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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