Australian, N.Z. Dollars Fall as Interest Rates May Have Peaked

The Australian and New Zealand
dollars declined on guess that involvement rates in the two
South Pacific Ocean states have got peaked.

Australia's dollar drop for a 3rd twenty-four hours after the Reserve
Bank of Commonwealth Of Commonwealth Of Australia said former charge per unit additions had caused a
''moderation inch demand'' arsenic it left adoption costs unchanged
today. New Zealand's dollar extended the past week's loss on
speculation Modesty Depository Financial Institution of New Seeland Governor Alan Bollard
will propose this hebdomad he will cut involvement rates.

''The RBA signalings it now have a more than neutral stance, and is
probably on clasp for some clip to come,'' said ,
chief economic expert at Sonray Capital Markets Ltd. inch Sydney. ''The
implications are some short-term selling of the Australian
dollar.''

The Australian dollar dropped to 95.48 U.S. cents at 4:40
p.m. inch Sydney from 95.69 cents before the Modesty Bank's
decision and from 95.54 late in Asia yesterday. It had earlier
risen as much as 0.3 percentage to 95.80 cents as a government
report showed edifice blessings surged in April. The currency
slipped to 99.42 hankering from 100.20 yen.

The New Seeland dollar declined to 78.41 U.S. cents from
78.45 cents late in Asia yesterday. The currency weakened to
81.60 hankering from 82.27 yen.

Governor John Glenn Wallace Stevens kept the nightlong hard cash rate
target at 7.25 percentage in Sydney today, as prognosis by all 21
economists. Wallace Stevens said in a statement that ''the board's
judgment is that the current stance of pecuniary policy remains
appropriate for the clip being.''

Economic Reports

Australia's dollar declined for a 2nd twenty-four hours versus the yen
as bargainers stake the RBA will raise the 7.25 percentage benchmark
rate by 12 footing points in the adjacent 12 months, down from 17
basis points yesterday, according to a
based on trading of interest-rate swaps.

The Australian currency had strengthened earlier. The
Bureau of Statistics said in Sydney today the figure of permits
granted to construct or restitute houses and flats climbed 7.8
percent from March, when they dropped a revised 5.5 percent. The
median estimation of 22 economic experts surveyed by Bloomberg News was
for a 0.5 percentage decline.

Australia's trade deficit on goods, services and
investment expanded to A$19.5 billion ($18.6 billion) from a
revised A$18.7 billion in the 4th quarter, the also said today. The median value estimation in a Bloomberg
News study of 21 economic experts was for an A$20.5 billion gap.

New Zealand's dollar drop on guess RBNZ Governor Alan
Bollard will signalize at a June 5 meeting the cardinal depository financial institution will
lower adoption costs from a record 8.25 percentage to support
economic growth.

'Explicit Easing Bias'

''We anticipate the RBNZ to observe the balance of hazards has
shifted and move to an expressed moderation bias,'' said , currency strategian at Depository Financial Institution of New Seeland Ltd. in
Wellington. ''We still prefer to merchandise the New Seeland dollar
from the short side.'' Type A short place is a stake on a diminution in
an asset's price.

All 15 economic experts surveyed by Bloomberg News anticipate Bollard
will maintain the functionary hard cash charge per unit at 8.25 percentage on June 5. The
nation's benchmark charge per unit is 6.25 per centum points higher than
the Federal Soldier Reserve's mark and 7.75 points more than Japan's,
making the currency a favourite mark of so-called carry trades.

Deepening Recognition Concerns

The Australian and New Seeland dollar's diminution against the
yen accelerated today on concerns credit-market losings will
deepen after the Wall Street Diary reported Lehman Brothers
Holdings Inc. May raise as much as $4 billion of other capital,
citing unidentified executives.

In a carry trade, investors acquire finances in a state with low
borrowing costs and put in one with higher involvement rates,
earning the spreading between the adoption and loaning rates. The
risk is that currency marketplace moves wipe out those profits.

Australian authorities chemical bonds advanced after the rate
decision and statement were released. The output on the benchmark
two-year note drop 6 footing points, or 0.06 per centum point, to
6.75 percent, according to information compiled by Bloomberg.

New Seeland 10-year government chemical bonds rose for a 7th day,
the longer stretch since Aug. 6. The output drop 2 footing points
to 6.44 percent. A footing point is 0.01 per centum point.

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