Bloomberg News

Aussie, N.Z. Dollars Drop Against Yen as S&P Cuts Spain Rating

October 13, 2011

Oct. 14 (Bloomberg) -- The Australian and New Zealand dollars fell against the yen for a second day after Standard & Poor’s cut Spain’s long-term sovereign credit rating, damping demand for higher-yielding currencies.

The currencies of both South Pacific nations slid against the dollar as declining Asian stocks spurred a flight to safer assets. Losses in the so-called Aussie and kiwi were limited before a meeting of Group-of-20 finance chiefs starts in Paris today.

“I don’t think the market’s out of the woods yet,” said Thomas Averill, a director at foreign-exchange and interest-rate risk management company Rochford Capital in Sydney. “The Aussie is going to be drifting over the course of today and may get sold quite aggressively overnight.”

Australia’s currency slid 0.2 percent to 78.22 yen at 12:19 p.m. in Sydney. The Australian dollar fell to as low as $1.0145 before trading at $1.0165, 0.3 percent lower from yesterday. The New Zealand dollar declined 0.3 percent to 79.27 U.S. cents, and weakened 0.3 percent 61 yen.

The MSCI Asia Pacific Index dropped 0.8 percent.

S&P lowered Spain’s credit rating to AA- from AA, the company said in a statement. The outlook is negative.

“The market would want to take a breather into G-20 on the weekend,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “I think the market will want to sell the euro before it sells any other currencies so we’re buying Aussie and kiwi.”

China, Australia’s biggest trading partner and New Zealand’s second-largest export market, will today report inflation figures for September.

Stories on Australian economy: {TNI AUD ECO BN <GO>} Stories on the New Zealand dollar: {NSE NEW ZEALAND DOLLAR <GO>} Research on currencies: {NI ANAFX BN <GO>}

--With assistance from Masaki Kondo in Tokyo. Editors: Nate Hosoda

To contact the reporters 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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