The Australian and New Zealand dollars rose, heading for a third weekly gain, as commodity prices surged and the U.S. currency slid on concern the Federal Reserve’s plans to keep borrowing costs low will spur inflation. New Zealand’s dollar headed for its biggest weekly advance against the U.S. dollar since 1987 on speculation the Fed’s plan to buy Treasuries will push down yields on U.S. assets. The Australian and New Zealand dollars approached two-month highs against the yen after the prices of the commodities the two nations export rose by the most this year. “The key factors are some expectations in the market that we are close to the bottom of the global recession and we’ve seen the bottom in commodity prices,” said Thomas Harr, a Singapore-based currency strategist at Standard Chartered Plc. “The hopes are that China’s economy is also close to the bottom and its fiscal stimulus could have an impact, and that would obviously benefit Australia because China is a very important trading partner for Australia in commodities.” Australia’s currency rose 0.3 percent to 68.70 U.S. cents as of 12:36 p.m. in Sydney, from 68.51 cents in New York late yesterday, when it touched 69.44 U.S. cents, the strongest since Jan. 12. It gained 4.4 percent since late on March 13 in New York, heading for a third weekly advance and the largest since Feb. 6. The Australian dollar rose 0.5 percent to 65.09 yen, after yesterday reaching as high as 65.59 yen. New Zealand Dollar New Zealand’s dollar advanced 0.6 percent to 55.70 U.S. cents, after touching 56.11 cents yesterday. The currency jumped 6 percent since March 13, the most since November 1987. It advanced 0.8 percent to 52.73 yen today. Interest rates are 3.25 percent in Australia and 3 percent in New Zealand compared with 0.1 percent in Japan and as low as zero in the U.S., prompting investors to purchase the South Pacific nations’ assets with money borrowed in U.S. or Japan. The risk in such so-called carry trades is that exchange-rate moves can erase profits. “The announcement by the Fed that it was ramping up quantitative easing -- in particular by purchasing $300 billion in Treasury securities -- stoked fears that a massive increase in the supply of money would debase the currency,” analysts at National Australia Bank Ltd., including John Kyriakopoulos in Sydney, wrote today in a note to clients. “For the Australian dollar to outperform, it will take a broad-based rebound in commodity prices.” Silver, Gold Silver jumped 13 percent yesterday, the most since 1979. Gold had the biggest gain since September, and crude oil topped $52 a barrel as the Fed’s steps to revive the U.S. economy prompted speculation demand for raw materials will increase as investors seek hedges against inflation. Every commodity in the Reuters/Jefferies CRB Index of 19 prices climbed. Australian government bonds fell, paring a weekly gain. The yield on the benchmark 10-year note rose nine basis points to 4.18 percent, Bloomberg data show. The price of the 5.25 percent security due March 2019 fell 0.75 or A$7.50 per A$1,000 face value, to 108.669. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.45 percent from 3.42 yesterday.

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