The currencies climbed to the highest levels in at least two weeks as Bernanke said U.S. monetary and fiscal policies should ``support a return to growth in the second half of this year and next year.'' He didn't repeat the expectation of ``moderate growth'' from the Fed's March 18 statement, leading investors to increase so-called carry trades.
``He appears to be rather upbeat about the prospects in the second half,'' said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``He's sending a message that the Fed views this as a shallow downturn. There are some signs of flows out of Japan into high-yielding investments that might be weighing on the yen.''
Australia's dollar advanced to 93.96 yen, the highest since March 14, before trading at 93.86 yen as of 4:43 p.m. in Sydney, from 93.04 late in Asia yesterday. It traded at 91.35 U.S. cents from 91.10 cents.
New Zealand's dollar strengthened to 81.31 yen, the highest since March 19, before trading at 80.96 yen from 80.43 yen yesterday. It bought 78.76 U.S. cents from 78.73 cents.
Bernanke said in congressional testimony yesterday the Fed's decision two weeks ago to support JPMorgan Chase & Co.'s takeover of Bear Stearns Cos. was a ``one-time event.'' He also acknowledged the possibility of a recession in the first half.
Australia's 7.25 percent benchmark interest rate and New Zealand's record-high 8.25 percent rate make the currencies favorites for the carry trade, where investors get funds in a country with low borrowing costs and put the money into one with higher returns, earning the spread between the two. The risk is that currency moves erase the profit between the two rates.