Australian Dollar Rises on Record Iron Ore

Australia's dollar rose to a seven- month high against the yen as Rio Tinto Group said China agreed to pay a record price for iron ore. The New Zealand dollar fell versus the U.S. dollar before a report on economic growth.

The Australian currency headed for its first quarterly gain versus the yen in a year as Rio said Baosteel Group Corp., China's biggest steelmaker, will pay 80 percent more for ore. That could bolster Australia's overseas earnings and support its economic expansion. The New Zealand currency was poised to snap a two-quarter winning run versus the U.S. dollar as a report this week is forecast by economists to show the economy shrank.

The Australian dollar advanced to 103.22 yen, the highest level since Nov. 9, before trading at 103.18 yen at 5:03 p.m. in Sydney from 102.49 yen late in Asia yesterday. It has risen 13.4 percent this quarter and 5.5 percent this year. The currency traded at 95.43 U.S. cents from 95.14 cents. It has risen 4.5 percent this quarter and 9.1 percent this year.

The New Zealand dollar fell to 75.77 U.S. cents from 75.84 cents late in Asia yesterday. It has lost 3.6 percent this quarter and 1.1 percent this year. The currency traded at 81.88 yen from 81.69 yen. It has strengthened 4.5 percent this quarter, while declining 4.3 percent this year.

China's Baosteel will pay $144.66 a dry metric ton for so- called Pilbara blend fines in the year that began April 1, Rio said yesterday in a statement. The contract marks the first time Chinese buyers agreed to pay more for Australian ore than supplies from Brazil, which are costlier to ship. Iron ore is Australia's largest export.

The Australian Bureau of Agricultural and Resource Economics said yesterday commodity exports may rise to a record A$212 billion ($202 billion) in the year ending June 30, 2009. That compares with its March forecast of A$189 billion and estimated 2008 sales of A$151 billion. Exports of raw materials contribute 17 percent to Australia's economy.

Australian Dollar Rises on Record Iron Ore, Bloomberg
6/24/2008 6:48:55 AM