Bloomberg News

Aussie, Kiwi Dollars Advance Amid U.S., Japan Monetary Stimulus

April 09, 2013

The Australian and New Zealand dollars strengthened as monetary stimulus in the U.S. and Japan weighed on those countries’ bond yields, boosting the relative value of the South Pacific nations’ assets.

Federal Reserve Chairman Ben S. Bernanke said yesterday that expansionary monetary policies in the world’s largest economies are “mutually constructive.” The so-called Aussie reached a 4 1/2-year high against the yen after the Bank of Japan (8301) boosted bond purchases last week in a program known as quantitative easing, or QE. New Zealand’s dollar gained to the highest in six weeks versus its Australian peer after data showed the smaller nation’s house prices rose.

“It’s QE everywhere,” said Hans Kunnen, the chief economist in Sydney at St. George Bank Ltd. “We’re not engaging in that practice. So the Aussie dollar should strengthen against the euro, U.S. dollar and yen simply on the basis of the interest-rate structure and a relative lack of supply.”

The Australian dollar advanced 0.2 percent to $1.0429 as of 4:21 p.m. in Sydney. It touched 103.82 yen, the highest since July 2008, before trading little changed at 103.42. New Zealand’s currency, nicknamed the kiwi, added 0.3 percent to 84.89 U.S. cents and rose 0.1 percent to 84.15 yen.

The kiwi advanced 0.2 percent to NZ$1.2285 per Australian dollar after reaching NZ$1.2274, the strongest since Feb. 25.

Australian Bonds

The yield on Australia’s current 10-year note rose two basis points, or 0.02 percentage point, to 3.24 percent. It fell to 3.18 percent yesterday, a level unseen since Dec. 12. New Zealand’s two-year interest-rate swap advanced two basis points to 2.90 percent.

Bernanke said monetary stimulus from global central banks “is providing additional support for other countries through stronger financial markets, more exports.” He commented in response to audience questions at a conference in Stone Mountain, Georgia.

Home prices rose 6.5 percent in March from a year earlier, Quotable Value New Zealand, a government-owned property research company, said in an e-mailed statement. That’s the biggest increase since 2008.

A gauge of Australia’s business conditions fell to minus 7 in March from minus 3 the prior month, a report from National Australia Bank Ltd. showed today. An index of business confidence rose to 2 from 1.

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

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


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