The New Zealand and Australian dollars were the best performers among the 16 most-active currencies against the U.S. dollar this week after ratings company Standard & Poor's predicted an end to banks' subprime mortgage writedowns, which have exceeded $188 billion. The two currencies rose against the yen as traders were lured by the nations' interest rates of 8.25 percent and 7.25 percent, respectively.
New Zealand's dollar rose to 81.60 U.S. cents at 2:41 p.m. in Wellington, from 80.79 cents in late Asian trading yesterday, headed for a 2.8 percent weekly advance, the largest since the week ended Feb. 1. It gained 1.4 percent this week to 82.29 yen.
Australia's dollar climbed to 94.34 U.S. cents from 93.85 cents late in Asia yesterday, and was poised for a 1.9 percent weekly gain, the most since the week ending Feb. 1. It advanced 0.6 percent this week to 95.24 yen.
The New Zealand and Australian dollars gained the most among the 16 major currencies versus the yen this week as the MSCI Asia-Pacific Index of regional shares excluding Japan rose 0.8 percent after the Standard & Poor's 500 Index advanced 0.5 percent yesterday.
Australia's dollar also gained after prices of commodities in the UBS Bloomberg Constant Maturity Commodity Index rose 0.5 percent and the price of gold, the nation's third-most valuable export, surged above $1,000 an ounce for the first time.
Australia's 12-year high overnight cash-rate and all-time high interest rates in New Zealand make the currencies a popular target for the so-called carry trade, where funds borrowed in countries with lower interest rates are invested in places that offer higher returns.