By Candice Zachariahs March 22 (Bloomberg) -- The Australian dollar reached a one-week high and New Zealand’s currency rose versus the greenback as Asian stocks advanced and higher prices for commodities boosted demand for higher-yielding assets. New Zealand’s dollar was also bolstered after the International Monetary Fund said the nation’s central bank may need to raise interest rates “relatively quickly” once the economy begins to recover. Australia’s currency held above $1 for a second day as oil maintained yesterday’s advance after allied forces expanded their air campaign over Libya. Raw materials account for a majority of exports from Australia and New Zealand. “The situation in the Middle East is putting upward pressure on the price of gold and oil, and that in isolation benefits commodity-bloc currencies,” said Tim Waterer, a foreign-exchange dealer with CMC Markets in Sydney. “The stock market reaction to the Libyan actions over the past few days has been quite positive as there’s a hope there will be a quick resolution.” Australia’s currency rose to $1.0085, the most since March 15, as of 5:43 p.m. in Sydney from $1.0063 in New York yesterday. It fetched 81.59 yen from 81.54 yen. New Zealand’s dollar rose 0.6 percent to 73.99 U.S. cents and bought 59.87 yen from 59.61 yen in New York. The allied bombardment of Libya, which began March 19, has moved oil markets as fighting threatens to prolong supply disruptions. The most recent military actions “are focused on extending the no-fly zone southward, then westward from Benghazi,” General Carter Ham, the U.S. commander for combat operations against Libya, said in Stuttgart, Germany, yesterday. Crude Oil Crude for April delivery traded at $102.34 a barrel in electronic trading on the New York Mercantile Exchange, after a 1.3 percent advance yesterday. The MSCI Asia Pacific Index gained 2.2 percent after a 1.5 percent rise in the Standard & Poor’s 500 Index. The Aussie was also bolstered as traders reduced bets its central bank will lower benchmark rates next month. There is a 12 percent chance policy makers will reduce borrowing costs on April 5, down from as much as 34 percent last week, according to a Credit Suisse Group AG index based on swaps. Benchmark rates are 4.75 percent in Australia and 2.5 percent in New Zealand, compared with as low as zero in the U.S. and Japan. New Zealand’s economy will grow 1 percent this year before earthquake rebuilding boosts the expansion to 4 percent in 2012, the IMF said as part of an annual review of the country’s economy. N.Z. Growth The Reserve Bank of New Zealand’s half percentage-point cut in the official cash rate to 2.5 percent this month was appropriate, the fund said. The rate could be lifted “relatively quickly” should inflation pressures mount, it said. Gains in the so-called kiwi were trimmed before a government report due on March 24 forecast to show the nation’s economy nearly stalled in the fourth quarter. New Zealand’s gross domestic product grew 0.1 percent in the final quarter of 2010, according to the median forecast of economists surveyed by Bloomberg News, after shrinking 0.2 percent in the three months ended Sept. 30. That was the first drop since the first quarter of 2009. “We’re expecting a negative number from the GDP report so that will technically mean a double-dip recession,” said Tim Kelleher, vice-president of institutional banking and markets at Commonwealth Bank of Australia in Auckland. “When the market sees that, you may see the kiwi dollar come off again.” New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.28 percent. --Editors: Rocky Swift, Nicholas Reynolds To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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