The Australian and New Zealand dollars rose as Asian stocks gained for a fourth day, fueling speculation investors will buy more higher-yielding assets. The currencies also strengthened as Rio Tinto Group, the world’s third-largest mining company, said metals markets may recover in the second half of the year. Commodities account for more than half of the two nations’ exports. New Zealand’s currency gained after the country’s current-account deficit widened less than some economists predicted. “The appetite for risk is definitely back in play again for the Aussie coupled with negative U.S. dollar sentiment,” said Paul Milton, chief foreign-exchange dealer at Societe Generale Australia Ltd. in Sydney. “The Aussie and kiwi should really benefit as long as the domestic data behaves itself,” he said, referring to the currencies by their nicknames. Australia’s currency strengthened 0.1 percent to 69.87 U.S. cents as of 2:06 p.m. in Sydney from late in New York yesterday. The currency advanced 0.5 percent to 68.40 yen. New Zealand’s dollar rose 0.9 percent to 57.09 U.S. cents, and climbed 0.9 percent to 55.78 yen. The Australian dollar is still heading for a 0.9 percent loss this quarter against the greenback, while New Zealand’s has slipped 1.4 percent. The market “can’t be too far away from the bottom,” for commodities, Guy Elliott, chief financial officer of London- based Rio, said today in Singapore. Copper prices have been “pretty good” recently, he said. GDP Data Gains in the New Zealand dollar may be limited before a report tomorrow that economists say will show the economy shrank 1.1 percent last quarter, extending a year-long recession. “The fact that the current-account number came in as expected was given a tick,” said Annette Beacher, senior strategist at TD Securities in Sydney. “We’ve upgraded our kiwi dollar forecasts on the back of U.S. dollar weakness, not because we’re upbeat on New Zealand.” The kiwi will trade at about 55 U.S. cents for the rest of the year, TD Securities forecast, revising a previous estimate that it will fall to 45 cents by mid-year and rebound to 55 cents by the end of 2009. New Zealand’s current-account deficit widened to a record in 2008 as the global recession reduced tourism and as costs for shipping goods overseas rose. The shortfall expanded to NZ$16.07 billion ($9.2 billion) in the 12 months ended Dec. 31, Statistics New Zealand said today in Wellington. Lower Rates Australia’s dollar also gained as Anthony Richards, head of economic analysis at the Reserve Bank of Australia, said the nation was not at risk of a U.S.-style subprime crisis. RBA Governor Glenn Stevens said yesterday resistance by commercial banks to passing on potential interest-rate cuts wouldn’t diminish the effectiveness of monetary policy. The central bank has lowered its benchmark rate 4 percentage points since early September to a 45-year low of 3.25 percent. Traders bet yesterday the bank will make a further 50 basis points of cuts in the next year, down from a prediction of almost 1 percentage point two weeks ago, a Credit Suisse Group AG index based on swaps trading shows. Higher interest rates in Australia and New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attract investors to the nations’ higher-yielding assets. New Zealand’s cash rate is at 3 percent. Australian government bonds fell for the fifth day, matching the longest such streak since February 2008. The yield on 10-year notes rose six basis points, or 0.06 percentage point, to 4.51 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.51, or A$5.11 per A$1,000 face amount, to 105.881. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.86 percent from 4.11 yesterday.

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