The Australian dollar fell the most in a month against the yen and New Zealand’s currency weakened as stocks slumped, damping demand for higher-yielding assets. The currencies also fell versus the U.S. dollar after Treasury Secretary Timothy Geithner pledged financing for as much as $2 trillion of efforts to spur lending without providing specifics on a plan to help banks deal with toxic assets. The local dollars also weakened as reports today showed Australian consumer confidence fell and spending on debit, credit and store cards in New Zealand dropped for a third month. “There’s a lot of uncertainty and nervousness in the market,” said Paul Milton, chief foreign-exchange dealer at Societe Generale Australia Ltd. in Sydney. “The risk play has been unwound again. Any strength is going to be a good opportunity to get short the Aussie,” he said, referring to the currency by its nickname. Australia’s dollar slid for a second day against the yen, falling 3 percent to 59.13 yen as of 2:58 p.m. in Sydney from late in Asia yesterday. That was the biggest drop since Jan. 13. The local dollar dropped 2.1 percent to 65.42 U.S. cents. New Zealand’s currency slipped 3.1 percent to 47.31 yen, and slid 2.1 percent to 52.36 U.S. cents. Regional equities sank after the Standard & Poor’s 500 Index yesterday dropped 4.9 percent, the most since U.S. President Barack Obama’s inauguration on concern the rescue plan will fail to prevent an extended recession in the world’s largest economy. ‘Not Good’ “The reality that you need a plan like this is not good for markets and not good for holding risk,” said Alex Sinton, a senior currency dealer at ANZ National Bank Ltd. in Auckland. The Australian dollar will find so-called support at 64.70 U.S. cents and New Zealand’s at 51.69 cents, he said. Currency movements in Asia may be volatile as a national holiday in Japan reduces liquidity, Sinton said. An index of Australian consumer sentiment declined 4.6 percent this month to 85.8 points, according to a Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers released in Sydney. The gauge has held below 100 since February 2008, indicating pessimists outnumber optimists, as rising unemployment and falling property prices damp household confidence. ‘More Damaging’ A worldwide retreat from risk-taking would be “even more damaging than what we have seen to date,” Reserve Bank of Australia Governor Glenn Stevens said yesterday in a speech in Kuala Lumpur. “The problem in the next couple of years will not be too many cross-border capital flows, but too few; not too much risk-taking, but too little,” he said. Benchmark interest rates of 3.25 percent in Australia and 3.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attract investors to the South Pacific nations’ assets. The risk in such trades is that currency market moves may erase profits. The RBA lowered borrowing costs to a 45-year low this month in an effort to boost domestic demand while the Australian government announced a A$42 billion ($27.5 billion) stimulus package to help the nation skirt a recession. The Australian dollar should “benefit most” as the yen is set to weaken and China’s economy may be heading for an early rebound, according to BNP Paribas SA, France’s largest bank. “If we are correct in our interpretation concerning Japan and China, the Australian dollar should benefit most,” foreign- exchange analysts led by London-based Hans-Guenter Redeker wrote in the report yesterday. Debt Sale Australia sold A$601 million of 2013 bonds today at a weighted average yield of 3.46 percent in the second auction of its expanded borrowing program as it seeks to raise as much as A$24 billion in five months. Buyers bid for 2.6 times the amount offered in the sale of 6.5 percent bonds, the Australian Office of Financial Management said. That matched the so-called bid-to-cover ratio at the Feb. 6 sale of April 2015 securities. Australian government bonds rose for a third day. The yield on the 10-year note fell six basis points, or 0.06 percentage point, to 4.28 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 advanced 0.522, or A$5.22 per A$1,000 face amount, to 107.911. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.38 percent from 3.48 yesterday.

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