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Oceania's Dollar Rose for a Second Day
The Australian and New Zealand currencies were the second- and third-best performers among major currencies against the U.S. dollar over the past three months as interest rates of 3 percent in Australia and 2.5 percent in New Zealand attracted investors to the South Pacific nations' assets. South Africa's rand is the top performer.
The Australian and New Zealand dollars gained for a second day as speculation U.S. interest rates will stay low buoyed demand for higher-yielding assets. The currencies extended yesterday's biggest advance in a week against the U.S. dollar after futures traders added to bets the Federal Reserve will keep the benchmark rate close to zero for the rest of this year. Demand for higher-yielding assets was bolstered after the European Central Bank called for banks to bid in the first auction of 12-month loans, prompting speculation that the funds being made available will be invested in countries with higher benchmark interest rates. "People are afraid of strong comments from Fed officials that will reduce tightening expectations," said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. "Further ebbing of tightening expectations is weighing on the U.S. dollar, so it's weakening against currencies like the Aussie and kiwi," he said. Australia's currency rose to 79.85 U.S. cents as of 5:02 p.m. in Sydney, from 79.39 cents yesterday in New York. It bought 76.11 yen from 75.60 yen. New Zealand's dollar strengthened to 64.41 U.S. cents from 63.97 cents. It traded at 61.37 yen from 60.92 yen.read source article