Thursday, October 2, 2008

Australia, New Zealand Dollars Drop as Commodities, Stocks Fall

By Candice Zachariahs

Oct. 3 (Bloomberg) -- The Australian dollar fell to a 14- month low against the greenback and traded at the lowest since 2005 versus the yen as concerns over slowing growth sent prices tumbling for commodities the nation exports. New Zealand's currency also fell.

Australia's currency fell for an eighth day as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials dropped. The Australian and New Zealand dollars slid against the yen as U.S. stocks dropped for a second day, reducing demand for higher-yielding assets.

``The pressure on the aussie and the kiwi will remain throughout the day,'' said John Body, head of financial markets at ANZ National Bank Ltd. in Auckland, referring to the currencies by their nicknames. The Australian dollar will trade between 77 and 77.80 U.S. cents and the kiwi will buy between 65.25 and 65.80 U.S. cents through the day, he said.

The Australian dollar fell 1.4 percent to 77.34 U.S. cents as of 7:43 a.m. in Sydney from 78.43 cents in late Asian trading yesterday. It touched 77 cents, the weakest since August 2007. The currency dropped to 81.01 yen, the lowest since March 2005, before trading at 81.44 yen from 82.75 yesterday.

New Zealand's dollar weakened 1.5 percent to 65.72 U.S. cents from 66.74 cents late in Asia yesterday. It dropped 1.7 percent to 69.24 yen.

The Australian and New Zealand dollars fell as the price of gold, Australia's third most-valuable raw material export, and crude oil, its fourth most-valuable, slid in New York. Lumber, one of New Zealand's biggest export earners, plunged to a 17- year low on speculation slowing growth will limit demand for building materials.

Raw materials account for 60 percent of Australia's exports, and 70 percent of New Zealand's.

No comments: