By Yoshiaki Nohara and Candice Zachariahs April 27 (Bloomberg) -- The New Zealand and Australian dollars fell on concerns a European Union-led aid package for Greece won’t keep the nation’s deficit crisis from spreading, damping demand for higher-yielding currencies. The so-called kiwi dropped against 15 of its 16 major counterparts after German Chancellor Angela Merkel yesterday said she won’t release Greek rescue funds until the country shows it’s got a “sustainable, credible” plan to cut its deficit. The Australian dollar also retreated as Asian stocks dropped. “We will see risk wobble every second day or so for a few more weeks” until the EU’s long-term debt situation becomes clear, said Annette Beacher, senior strategist at TD Securities Ltd. in Singapore. The New Zealand dollar fell to 71.97 U.S. cents at 4:36 p.m. in Sydney from 72.34 cents in New York yesterday, when it reached 72.56, the most since Jan. 20. The kiwi fell to 67.70 yen from 67.50 yen yesterday, when it touched 68.31, the highest since Jan. 14. Australia’s currency fell 0.3 percent to 92.42 U.S. cents. The currency was at 86.69 yen from 87.09 yen after touching 87.77 yesterday, the strongest since Sept. 29, 2008. The MSCI Asia Pacific Index of shares fell 0.2 percent and China’s Shanghai Composite Index dropped 2.6 percent. ‘Do Homework’ There will be no decision on aid for Greece until the International Monetary Fund works out a plan of cuts with the government in Athens, Merkel told reporters yesterday in Berlin. “I’ve said for weeks that Greece must do its homework first,” Merkel said at a regional election rally in the western German town of Soest. “We’re not doing this because we believe Greece needs help. We’re doing it because we’re interested in the euro’s stability. We can’t idly stand by when our currency comes under threat.” New Zealand’s currency failed to rebound after Auckland- based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, raised its forecast for milk prices today. “The market was leaning on this increase from Fonterra, and that’s contributed to the kiwi’s performance over the last few sessions,” said Greg Gibbs, an currency strategist in Sydney at Royal Bank of Scotland Plc. “That’s probably why it’s not being bought.” Milk Prices Fonterra increased its forecast milk price for the 2009/10 season by 40 New Zealand cents to NZ$6.10 a kilogram of milk solids. Dairy is New Zealand’s biggest export earner, accounting for 20 percent of the nation’s trade receipts in the year ended Feb. 28. China is the country’s biggest milk powder customer and New Zealand’s second-largest export market overall. New Zealand’s central bank will keep its official cash rate unchanged at 2.5 percent at its April 29 meeting, according to all 14 economists in a Bloomberg News survey. Losses in the Australia’s dollar were limited as a Bloomberg News survey of economists showed that Australian consumer prices rose 0.8 percent in the first quarter, after gaining 0.5 percent in the previous three months. The government reports the data tomorrow. Reserve Bank of Australia Governor Glenn Stevens last week said interest rates are “close to average.” ‘Major Release’ “CPI in Australia is the major release this week,” analysts including Singapore-based Mansoor Mohi-uddin at UBS AG wrote in a research note. “A strong release will further boost RBA expectations, but in light of the recent change in language from RBA Governor Stevens, our economists believe that the RBA will begin to slow down.” Australia’s producer prices index gained 1 percent in the first quarter at the fastest pace since 2008, the Bureau of Statistics said in Sydney today. Australian government bonds rose. The yield on the 4.5 percent note maturing in April 2020 fell two basis points to 5.78 percent, according to Bloomberg data. A basis point is 0.01 percentage point. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.33 percent from 4.30 percent. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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