New Zealand’s currency headed for a second weekly loss against the dollar after Standard & Poor’s joined Fitch Ratings in cutting the country’s credit rating, adding to concern borrowing costs will increase. The so-called kiwi weakened versus all 16 major peers this week as a survey showed business confidence fell for a second month in September. The Australian dollar extended a fourth weekly decline after a gauge of Chinese manufacturing shrank for a third month. The Aussie reached a three-week high against the kiwi. “The global outlook is far from looking positive,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “While that remains the backdrop, commodity currencies like the Aussie and the kiwi will probably underperform others.” New Zealand’s currency weakened to 76.56 U.S. cents as of 1:16 p.m. in Sydney from 77.10 cents in New York yesterday. It dropped to 58.62 yen from 59.24 yen. The Australian dollar slid to at 97.51 U.S. cents from 97.82 cents. It bought 74.69 yen from 75.16 yen. The Australian currency climbed as high as NZ$1.2771, its strongest level since Sept. 8, before trading at NZ$1.2741 from NZ$1.2687 yesterday. The kiwi was poised for a 10 percent drop against the dollar this month and is down 7.7 percent for the quarter. The Australian dollar has lost 9 percent since Aug. 31 and has declined 9.1 percent in the past three months. Rating Cuts New Zealand’s sovereign credit rating was cut one step to AA by Fitch, which cited the southern Pacific nation’s high level of external debt and its persistent current account deficit. The outlook is stable after the rating was reduced from AA+, Fitch said yesterday in a statement. The company had New Zealand on a negative outlook since July 2009. The country had its long-term local-currency rating cut to AA+ from AAA and its long-term foreign-currency rating reduced to AA from AA+ by S&P, which has a stable outlook on the rankings. The timing of the downgrades was the “bigger surprise” as New Zealand’s large external debt burden and current account deficit have long been recognized, Todd Elmer, head of Group- of-10 currency strategy for Asia excluding Japan at Citigroup Inc. in Singapore, wrote in an e-mailed note today. “Some pressure on NZD looks warranted, particularly against the fragile global backdrop.” New Zealand’s 10-year yields rose 11 basis points, or 0.11 percentage point, to 4.42 percent. The nation’s two-year swap rate, a fixed payment made to receive floating rates, rose five basis points to 3.15 percent. N.Z., China Data A net 30.3 percent of companies in New Zealand expect the economy will improve over the next 12 months, down from 34.4 percent in August, according to a survey by ANZ National Bank Ltd. released today. The net figure subtracts the number of pessimists from the number of optimists. The Australian dollar weakened against its U.S. and Japanese counterparts after a purchasing managers’ index for China showed the longest contraction in two years. The reading of 49.9 was unchanged from August and compared with a preliminary 49.4 figure published last week, according to the gauge released today by HSBC Holdings Plc and Markit Economics. It was the third month the reading was below the 50 level that separates expansion from contraction. China is Australia’s largest trading partner and New Zealand’s second- biggest export market. To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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