New Zealand's dollar advanced to a two-week high as the UBS Bloomberg Constant Maturity Commodity Index climbed to a record last week. Raw materials including gold make up 70 percent of New Zealand's overseas shipments.
The New Zealand dollar rose to 76.32 U.S. cents from 76.11 cents late in New York on June 20. It earlier reached 76.38 cents, the highest since June 10. It has fallen 0.4 percent this year and 2.9 percent this quarter. The currency climbed to 81.93 yen from 81.70 yen. It has declined 4.3 percent this year.
Prices for coking and thermal coals, iron ore and crude oil have all risen to records this year, leading to central bank interest-rate increase since January to curb inflation.
Benchmark rates are 7.25 percent in Australia and 8.25 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the Australian and New Zealand currencies a favorite for the so-called carry trade.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency market moves erase those profits.
New Zealand's dollar may extend this quarter's 4.6 percent advance against the yen as the yield advantage on benchmark 10- year New Zealand government bonds over similar-maturity Japanese debt widened to 4.71 percentage points, the most since June 3.