New Zealand's dollar declined to an almost two-week low after a government report showed home-building approvals fell the most in eight months in March, backing the case for the central bank to cut interest rates. Australia's dollar dropped to its lowest level in more than a week on speculation a decline in commodity prices will reduce the country's export earnings.
New Zealand's dollar fell to 80.71 yen at 7:02 p.m. in Wellington from 80.92 yen late in Asia yesterday. It earlier reached 79.99 yen, the lowest since April 17. It has fallen 5.8 percent this year. It rose 3 percent this month, set for its first monthly advance in 2008. The currency weakened for a second month versus the U.S. dollar, losing 1.1 percent this month to 77.71 cents. It has risen 1.4 percent this year.
Australia's dollar declined to 97.09 yen from 97.24 yen late in Asia yesterday. It earlier touched 96.17, the lowest since April 21. It has gained 6.6 percent this month. The currency strengthened 2.4 percent this month to 93.54 U.S. cents. It has advanced 6.9 percent so far in 2008.
Approvals to build new houses and apartments declined 9.1 percent in March from February when they fell 6.6 percent, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures.
Reserve Bank of New Zealand Governor Alan Bollard last week said the economy will slow more than he previously forecast amid a slump in business confidence and a fall in farm production. Exports, which make up 30 percent of the economy, rose at the slowest pace in eight months in March, a report showed yesterday.
Traders held bets the RBNZ will cut its record-high 8.25 percent benchmark rate. The odds of a reduction at the June 5 meeting were unchanged from yesterday at 17 percent, according to a Credit Suisse Group index based on interest-rate swaps.
U.S. reports yesterday showed confidence among Americans fell to a five-year low this month and home prices dropped by the most since at least 2001.
The Australian dollar's monthly advance stalled after the UBS Bloomberg Constant Maturity Commodity Index slid the most in five weeks. The prices of raw materials such as gold, which contribute about 17 percent to Australia's economy, fell as gains in the U.S. currency eroded the appeal of commodities as an alternative investment.