Australia’s dollar rebounded from its steepest drop in a month on prospects global growth will weather Ireland’s debt crisis and tensions in the Koreas. The so-called Aussie gained for a third day against the euro after Standard & Poor’s downgraded Ireland’s credit rating. The New Zealand dollar rallied on speculation its 1.7 percent drop yesterday was excessive after North Korea fired at a South Korea island. “Developments in Ireland and the Koreas won’t change the fact that the global economy is recovering gradually,” said Masashi Murata, vice president of foreign exchange in Tokyo at BBH Investment Services Inc., a unit of New York-based Brown Brothers Harriman & Co. “People should buy the Aussie against the euro. Commodity currencies are set to be bought on dips.” Australia’s currency gained to 97.91 U.S. cents as of 4:01 p.m. in Sydney from 97.23 cents in New York yesterday. The so- called Aussie sank 1.7 percent yesterday, the most on a closing day basis since Oct. 19. It rose to 73.05 euro cents from 72.74, after earlier reaching 73.10 euro cents, the most since Nov. 12. The Aussie climbed to 81.51 yen from 80.86 yen. New Zealand’s dollar rose to 76.28 U.S. cents from 75.87 cents yesterday when it touched 75.78, the weakest since Oct. 29. The so-called kiwi gained to 63.50 yen from 63.09 yen. The Australian dollar has climbed against all of its major counterparts in the past six months on prospects for commodity- driven economic growth and the yield advantage of the nation’s debt over that of other developed markets. Swaps traders are betting the Reserve Bank of Australia will raise its target rate by 35 basis points over the next 12 months, according to a Credit Suisse AG index. RBA Rates A basis point is 0.01 percentage point. The RBA has lifted its key interest rate seven times since October 2009, the latest being a quarter-point increase to 4.75 percent on Nov. 2. That compares with rates near zero in the U.S. and Japan. Ireland had its long-term sovereign rating cut to A from AA- and its short-term rating to A-1 from A-1+ by S&P. The ratings company cited concerns about additional borrowing by the government as it seeks external aid from the International Monetary Fund and the European Union. The New Zealand dollar rose against most major counterparts as the United Nations Command proposed to North Korea’s military to hold talks between officers at the rank of general over the country’s shelling of a South Korean island. The UN Command said today in an e-mailed statement that it will investigate the incident. The military exchange is likely to fade as an issue as the week progresses, said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “Risk currencies such as the Aussie and kiwi will probably make a little bit of recovery,” Capurso said. The yield on Australia’s 10-year note rose one basis point to 5.44 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was at 3.90 from 3.895 percent. To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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