Australian Dollar Falls

The Australian dollar traded near a two-week low after Australia & New Zealand Banking Group Ltd. said it set aside additional funds for bad debts linked to U.S. credit-market losses.

Australia's currency declined after ANZ said provisions for bad loans are likely to be about A$1.2 billion ($1.1 billion) in the second half of the year. National Australia Bank Ltd. last week allocated A$830 million for potential mortgage-related losses. New Zealand's dollar advanced as charts used to predict price movements signaled its five-day decline was overdone.

Australia's dollar weakened to 95.59 U.S. cents at 5:12 p.m. in Sydney from 95.62 cents late in New York on July 25. It earlier reached 95.27 cents, the lowest since July 9. The currency traded at 102.90 yen from 103.11 yen on July 25.

The Australian dollar extended its loss against the U.S. dollar in the past five days to 1.6 percent, the second-worst performer of the 16 most-traded currencies behind New Zealand's dollar, after Melbourne-based ANZ said in a statement that profit will fall as much as 25 percent due to the higher provisions.

Australia's dollar traded near its lowest in more than a week versus the yen after John Stewart, chief executive officer of National Australia Bank, said yesterday that losses from the U.S. housing slump may more than triple.

The world's largest banks and securities firms have posted about $468 billion in losses and writedowns since the subprime crisis started last year, according to data compiled by Bloomberg. Australian companies including Babcock & Brown Ltd. and Allco Finance Group Ltd. are selling assets to raise funds after credit-market turmoil boosted debt costs.

Australia's dollar also weakened after National Australia Bank said its business confidence index fell 4 points to negative 8 in the second quarter, 18 points lower than a year ago. A reading below zero shows those expecting their industry to deteriorate in the third quarter outnumber those predicting an improvement.

Australian Dollar Falls, Bloomberg
7/28/2008 6:49:57 AM