By Candice Zachariahs Nov. 19 (Bloomberg) -- The Australian and New Zealand dollars erased earlier gains against the greenback as slides in regional equities damped appetite for higher-yielding currencies. The Australian dollar advanced against the yen before a speech today by Glenn Stevens, Governor of the Reserve Bank of Australia, which is expected to lower interest rates next month. Traders pared bets on a 100 basis points cut after the central bank yesterday released minutes of its Nov. 4 meeting, saying this month's 75 basis point reduction was intended to enable monetary policy to move ``quickly to a neutral position.'' Currency markets are ``still following the gyrations intra- day in equities but we're seeing a little less of that strength in the U.S. dollar and the yen,'' said Greg Gibbs, a currency strategist at ABN Amro Australia Ltd. in Sydney. ``It's an indication that some of the very rapid deleveraging that was driving up the U.S. dollar has slowed.'' The Australian dollar, he said, was benefiting from that. Australia's currency fell 0.1 percent to 64.55 U.S. cents as of 5:43 p.m. in Sydney, from 64.61 cents late in Asia yesterday. It advanced 0.4 percent to 62.43 yen. The Aussie, as the currency is called, will trade between 63.5 cents and 67 cents today, Gibbs said. New Zealand's dollar declined 0.1 percent to 54.95 U.S. cents from 54.98. It bought 53.11 yen from 52.94. The Australian dollar plunged 26 percent versus the greenback over the past three months and 35 percent against the yen after the Sept. 15 collapse of Lehman Brothers Holdings Inc. caused money markets to seize up and equities to tumble. The New Zealand dollar dropped 23 percent and 32 percent against the dollar and yen, respectively, in the same period. Stocks Slide The currencies slid as most Asian stocks declined led by commodity producers and financial companies. Australia's S&P/ASX 200 Index dropped 0.7 percent, while Japan's Nikkei 225 Stock Average fell 0.7 percent. Benchmark rates are 5.25 percent in Australia and 6.5 percent in New Zealand, compared with 0.3 percent in Japan and 1 percent in the U.S., encouraging investors to borrow in Japan and the U.S. to buy the South Pacific nations' assets. The risk in such trades is that currency market moves will erase profits. Traders are betting the RBA will lower rates by at least 0.75 percentage point at its next meeting on Dec. 2, according to a Credit Suisse index based on overnight swaps trading yesterday. There was a 75 percent chance of a one percentage point reduction, down from 80 percent on Nov. 17. Rate Outlook The RBA and Reserve Bank of New Zealand will look for a ``terminal'' cash rate of 3.5 percent, said RBC Capital Markets, revising earlier forecasts. In contrast to the Australia, the RBNZ's projected cuts are ``not adequately discounted by the market,'' wrote Sue Trinh, a senior currency strategist in Sydney. The Aussie will ``extend its recent rally towards NZ$1.20,'' against the New Zealand dollar, she wrote. Australia's currency bought NZ$1.1755, rising for a second day. Australian government bonds advanced. The yield on the 10- year note fell 12 basis points, or 0.12 percentage point, to 4.841 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 was higher by 1.006, or A$10.06 per A$1,000 face amount, at 103.283. New Zealand's two-year swap rate, a fixed payment made to receive floating rates, fell to 5.425 percent from 5.475 yesterday. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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