Australia's currency, known as the Aussie, slipped to its lowest this week after U.S. Treasury Secretary Henry Paulson voiced support for the dollar and Federal Reserve Bank of Philadelphia President Charles Plosser said the Fed should raise interest rates. New Zealand's currency dropped to its weakest in two weeks as traders raised bets the Reserve Bank of New Zealand will lower borrowing costs tomorrow.
Australia's dollar fell 1 percent, the most since June 12, to 96.78 U.S. cents at 4:40 p.m. in Sydney, from 97.81 cents late in Asia yesterday. It earlier reached 96.70 cents, the weakest since July 14. The currency traded at 104.16 yen from 104.07 yen.
The Aussie fell as the yield differential between two-year Australian and U.S. government debt narrowed to 3.90 percentage points, the least since Jan. 7. The U.S. central bank should raise interest rates ``sooner rather than later,'' Philadelphia Fed President Plosser said in a speech yesterday in King of Prussia, Pennsylvania.
Australia's dollar weakened against 12 of the 16 most- traded currencies after a rebound in the U.S. dollar and falling energy costs reduced demand for gold, Australia's third-largest export earner, as a hedge against inflation.
Losses in Australia's dollar were limited after the Bureau of Statistics said in Sydney today the consumer price index rose 1.5 percent from the first quarter, when it climbed 1.3 percent. The median estimate of 22 economists surveyed by Bloomberg News was for a 1.3 percent gain. Prices increased 4.5 percent from a year earlier.