Australian Dollar Rises as Prices Surge

The Australian dollar rose after a government report showed producer prices climbed by a record in the first quarter. The New Zealand dollar advanced as rising equities encouraged investors to buy higher-yielding assets.

Australia's dollar climbed for a sixth day against the yen and New Zealand's dollar gained for a fifth day on speculation the nations' central banks won't lower interest rates, spurring demand for so-called carry trades. The yield advantage on two- year Australian bonds over similar-maturity Japanese debt widened to 5.67 percentage points, the most since April 9.

The Australian dollar climbed to 97.99 yen, the highest since Feb. 29, before trading at 97.74 at 5:34 p.m. in Sydney from 96.89 yen late in New York on April 18. The currency rose to 94.15 U.S. cents from 93.35 cents before the report was released and from 93.47 cents in New York last week.

Prices paid to Australian producers rose 1.9 percent in the first quarter, the most since the series began in 1998, after gaining 0.6 percent in the previous three months, the Bureau of Statistics said in Sydney.

Australian Dollar Rises as Prices Surge, Bloomberg
4/21/2008 6:58:27 AM