The Australian and New Zealand dollars slid on concern weakening economic growth will lead the two nations’ central banks to lower interest rates, sapping the appeal of their assets.
The currencies weakened against the greenback and the yen as U.S. lawmakers said the Obama administration is prepared to let General Motors Corp. and Chrysler LLC go bankrupt. New Zealand’s dollar dropped as central bank Governor Alan Bollard expressed concern about gains in long-term interest rates. Australian retail sales fell by the most since 2000, spurring speculation the central bank may lower its benchmark April 7.
“The retail spending data shows consumers are extremely cautious and really leaves the door open for a rate cut from the Reserve Bank of Australia next week,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. “Bollard’s comments triggered the sell-off in” New Zealand’s dollar which may fall toward 55 U.S. cents, while Australia’s dollar may decline to 68 U.S. cents, she said.
Australia’s dollar weakened 0.4 percent to 68.82 U.S. cents as of 4:01 p.m. in Sydney from 69.13 cents late in New York yesterday. It depreciated 0.8 percent to 67.85 yen.
From Bloomberg News