By Candice Zachariahs Oct. 20 (Bloomberg) -- The Australian dollar briefly rose above 93 U.S. cents as the central bank said it was “possibly imprudent” to keep borrowing costs at a half-century low in minutes of its October meeting. New Zealand’s dollar slipped. The so-called Aussie traded near its strongest since August 2008 as Reserve Bank of Australia policy makers said keeping rates at “very low levels” for an extended period risks higher inflation. Futures traders are betting on a more than 30 percent chance that the benchmark rate will rise another 75 basis points by year-end. Demand for the two South Pacific currencies may be trimmed on speculation gains this month have been too rapid. “The market has taken the RBA minutes as reasonably upbeat, but it’s already there in terms of the rates priced in for year- end,” said Phil Burke, chief foreign-exchange dealer at JPMorgan Chase & Co. “The dips are going to be very shallow because there’s strong underlying sentiment for Aussie dollar, but it’s going to be a slow grind higher.” Australia’s currency rose as high as 93.11 U.S. cents, the most since August 2008, before trading at 92.83 cents as of 11:58 a.m. in Sydney from 92.92 cents in New York yesterday. The currency traded little changed at 84.11 yen. New Zealand’s dollar fell 0.3 percent to 75.44 U.S. cents and earlier touched 75.76 cents, the strongest since July 2008. It bought 68.37 yen from 68.52. RBA Minutes “The appreciation of the Australian dollar in recent months had reflected the generally improving sentiment in financial markets, the relative outperformance of the Australian economy and the strength of commodity prices,” policy makers said in minutes to the Oct. 6 meeting when the RBA unexpectedly raised rates by a quarter-percentage point. Benchmark interest rates are 3.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. Both South Pacific currencies touched the highest this year versus the yen as Asian equities continued a worldwide rally in stocks. Earnings at U.S. companies probably will exceed analysts’ third-quarter estimates, extending a rally in stocks to year-end, Nomura Holdings Inc. wrote in a note dated Oct. 16. Thirty-four of the 41 companies in the Standard & Poor’s 500 Index that reported since Oct. 7 surpassed analysts’ projections, according to Bloomberg data. Commodity Prices Demand was also bolstered by gains in commodities with the Reuters/Jefferies CRB index of 19 raw materials advancing a sixth straight session yesterday. It has added 7.8 percent this month. The London Metals Index, tracking the prices of copper, aluminum, lead, tin, zinc and nickel, advanced 3.2 percent yesterday, approaching its highest level this year. Australian government bonds advanced for the first day in five. The yield on 10-year notes fell five basis points, or 0.05 percentage point, to 5.57 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 rose 0.353, or A$3.53 per A$1,000 face amount, to 97.674. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 4.69 percent.

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