By Candice Zachariahs March 22 (Bloomberg) -- The Australian dollar slid for a third day as lower commodity and equity prices dented demand for higher-yielding assets. New Zealand’s currency weakened after a surprise interest- rate increase by India and concern that Greece will fail to secure financial assistance from the European Union prompted money managers to shun investments linked to growth. Australia’s dollar also fell on prospects gold, the nation’s third most valuable commodity export, may extend its biggest drop in six weeks from March 19 and as crude oil fell a third day. “The first sniff of negative news over Greece and the resulting sell-off in commodity prices and the Aussie comes down,” said Ian Fowler, senior corporate foreign exchange dealer at OzForex Ltd. in Sydney. “There’s a little bearishness creeping into the market with gold falling and a lack of confidence on the Greek rescue package.” Australia’s currency fell to 91.31 U.S. cents as of 4:53 p.m. in Sydney from 91.54 cents in New York last week. The currency weakened 0.3 percent to 82.62 yen. New Zealand’s dollar declined 0.4 percent to 70.54 U.S. cents and bought 63.82 yen from 64.12 yen. Gold for immediate delivery traded at $1,108 an ounce after dropping as much as 0.3 percent. The metal shed 1.8 percent on Friday, the steepest drop since Feb. 4. Crude oil, Australia’s fourth most valuable commodity export, slid for a third session, the longest losing streak in six weeks. Asian Central Banks Benchmark rates are 4 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to higher-yielding assets. The risk in such trades is that currency market moves will erase profits. The South Pacific nations’ currencies weakened after the Reserve Bank of India increased the benchmark reverse repurchase rate from a record low on March 19 and said containing inflation has become “imperative.” “India’s interest-rate rise sparked worries that other Asian central banks may soon follow suit and raised concern that the removal of economic stimulus will hinder global growth,” Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in a note. Declines in the so-called kiwi dollar were limited before a report that will probably show the nation’s economy grew at the fastest pace in two years in the final quarter of 2009. New Zealand’s economy expanded 0.8 percent in the fourth quarter, according to the median estimate of 13 economists in a Bloomberg News survey before the statistics bureau report on March 25. “With New Zealand data expected to confirm a relatively solid economic picture, we suspect any dips below 70 U.S. cents will be relatively short-lived this week,” Hampton said. Bets on Aussie Futures traders increased their bets that the Aussie will gain against the greenback, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 63,494 on March 16, the highest level since May 2008. “With one-way market positioning dominant, this opens up more potential weakness for the Australian dollar should it break down past the 100-day moving average which presently sits at 90.64 cents,” Amy Auster, head of foreign-exchange and international economics research at Australia & New Zealand Banking Group Ltd. in Melbourne, wrote in a note to clients. Australian government bonds fell with the yield on 10-year notes rising two basis points, or 0.02 percentage point, to 5.69 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was at 4.18 percent. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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