New Zealand’s dollar traded near a one-week low versus the greenback as concerns about European debt reduced investor demand for higher-yielding assets. The currency also weakened after New Zealand Reserve Bank Governor Alan Bollard said recent gains in the currency are slowing an export-led recovery and there’s a long-term overvaluation in the so-called kiwi. The Australian dollar traded above parity with the greenback after yesterday falling below that level for the first time since Nov. 3. “A sudden jump in risk aversion on concerns about Ireland and Portugal sparked a sell-off in U.S. stocks and broad safe- haven demand for the U.S. dollar,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Bollard’s comments that the market interpreted recent data more positively than was appropriate may have reduced expectations regarding future rate hikes.” New Zealand’s dollar was at 77.54 U.S. cents as of 4:09 p.m. in Wellington from 77.77 cents yesterday in New York. It earlier touched 77.38 cents, the weakest since Nov. 3. The kiwi reached 79.76 cents on Nov. 4, the strongest since April 2008. It traded at 63.37 yen from 63.53 yen. The so-called Aussie fetched $1.0023 from $1.0035 yesterday, when it touched 99.99 U.S. cents, the lowest since Nov. 3. The currency reached $1.0183 on Nov. 5, the most since Australia scrapped foreign-exchange controls in 1983. The Aussie traded at 81.94 yen from 81.98 yen. The Australian dollar may find buyers at about $1, while declines in New Zealand’s currency are likely to stall at around 77.50 U.S. cents, Jones said. The MSCI Asia Pacific Index of regional shares lost 0.5 percent after the Standard & Poor’s 500 Index sank 0.8 percent yesterday. ‘Tepid’ Recovery The spread on Portugal’s 10-year bonds over comparable German debt widened to a record 452 basis points yesterday, or 4.52 percentage points. The spread on Irish 10-year securities over bunds reached an all-time high 554 basis points. Portugal and Ireland are among Europe’s most indebted countries. The Fed said last week it will buy $600 billion in Treasuries through June to pump more money into the U.S. financial system. Treasury 10-year yields rose 11 basis points to 2.66 percent yesterday, boosting demand for the U.S. dollar. New Zealand’s economic recovery has been “tepid,” with recent indicators suggesting the pace of recovery has slowed, Bollard said in the RBNZ’s Financial Stability Report, released in Wellington today. “Despite strong commodity prices, prospects for export-led growth may also be hampered by a fairly soft global growth outlook.” “Bollard warned that some investors were interpreting recent New Zealand data more strongly than the central bank,” Amelia Bourdeau, a currency strategist in Stamford, Connecticut, at UBS AG, wrote in a research note. “He went on to say that the high level of the New Zealand dollar may reduce the pressure for rate rises.” The New Zealand currency also fell amid lingering concern an agricultural disease will hurt exports. A bacterial vine disease could have affected as many as 18 New Zealand kiwifruit orchards, according to the country’s Ministry of Agriculture and Forestry. The U.S. has stopped imports of kiwifruit nursery stock, according to the ministry. Jobs, Housing The Australian dollar gained earlier after the statistics bureau said home-loan approvals rose 1.3 percent in September from a month earlier. That exceeded the median estimate for a 1 percent rise in a Bloomberg News survey. The number of people employed in Australia increased by 20,000 in October after rising 49,500 in September, according to the median estimate of economists in a Bloomberg News survey. The government releases the data tomorrow. “Employment remains strong and the government expects the nation’s economy to be strong next year,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest foreign-exchange margin company. “The bias is for the Aussie to be bought on the back of the strong local economy.” The yield on Australia’s 10-year bond rose five basis points, or 0.05 percentage point, to 5.34 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates was at 3.930 percent from 3.925 percent yesterday. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Garfield Reynolds in Sydney at greynolds1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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