“The Australian and New Zealand dollars touched the highest in more than four years against the yen after the Bank of Japan (8301) expanded monetary stimulus, boosting the allure of higher-yielding assets.
The so-called Aussie and kiwi dollars retreated against the greenback as Japan’s easing measures increased demand for the U.S. currency. Australia’s bonds gained, sending yields to a one-month low.
“If you’ve got the BOJ pressing the long end of the yield curve, then Aussie-yen as a carry is going to be pretty attractive,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. “One of the quickest ways to generate inflation is to weaken the currency and it’s a happy byproduct of their policy.”
The Australian dollar declined 0.2 percent to 100.36 yen as of 4:26 p.m. in Sydney after touching 101.13, the highest since August 2008. The kiwi fell 0.2 percent to 80.99 yen, after reaching 81.61, the strongest since July 2008.
The Aussie slipped 0.2 percent to $1.0419 and is little changed this week. The New Zealand dollar slid 0.2 percent to 84.09 U.S. cents and has gained 0.5 percent since March 29.
“What we’re seeing now is very much a different transmission channel where the strengthening dollar-yen is leading to some upward pressure on other dollar-Asia crosses,” said John Horner, a currency strategist at Deutsche Bank AG in Sydney. “With Australia trading quite closely with a number of those Asian currency pairs, it’s translating into pressure on Aussie as well.”
