New Zealand Dollar Advance on Demand for Higher Yields


The Australian and New Zealand dollars rose for a second day against the yen as gains in stocks prompted investors to buy higher-yielding assets funded by loans in Japan.

The currencies also climbed for a second day against the U.S. dollar as JPMorgan Chase & Co. increased its bid for Bear Stearns Cos., boosting confidence in credit markets. The yield advantage on two-year Australian bonds over Japan's debt widened to 5.60 percentage points, the most in almost a week.

Australia's dollar rose to 91.46 yen as of 5:33 p.m. in Sydney from 90.29 yen late in Asian trading yesterday. It also climbed to 91.25 U.S. cents from 90.50. New Zealand's dollar advanced to 80.32 yen from 79.21 yen, and strengthened to 80.17 U.S. cents from 79.38 cents.

The Australian dollar may gain to 92.10 yen and 91.50 cents, while the New Zealand dollar may advance to 81.00 yen and 80.40 cents today, Soma forecast.

The Aussie appreciated against 9 of the 16 most-actively traded currencies and New Zealand's dollar gained versus 13 of the 16 after JPMorgan quadrupled its bid for Bear Stearns, once the biggest U.S. underwriter of mortgage bonds. The Federal Reserve helped broker the takeover.

Australia's dollar also gained as the price of gold, the nation's third-most valuable export, rose 1.1 percent, the most since March 13.

The MSCI Asia-Pacific Index of regional stocks excluding Japan gained 3.4 percent today after the Standard & Poor's 500 Index rose 1.5 percent.


TradingEconomics.com, Bloomberg
3/25/2008 6:51:43 AM