By Candice Zachariahs Jan. 20 (Bloomberg) -- The Australian and New Zealand dollars declined for a second day on concern China will maintain its efforts to curb loan growth, damping demand for higher- yielding assets. New Zealand’s currency also dropped versus all of its 15 most-active counterparts after a government report showed consumer prices unexpectedly fell last quarter, reducing speculation the central bank will raise interest rates. China has told some banks to limit lending and will restrict overall credit growth in the nation to 7.5 trillion yuan ($1.1 trillion) this year, banking regulator Liu Mingkang said today. “Further removal of policy stimulus by the Chinese authorities will be read as a negative” for riskier investments, said Khoon Goh, a senior markets economist at ANZ National Bank Ltd. in Wellington. New Zealand’s inflation report suggests the central bank “won’t be in any rush to bring forward the timing of the hiking cycle.” Australia’s currency dropped to 91.59 U.S. cents as of 4:46 p.m. in Sydney from 92.32 cents in New York yesterday. The currency fell 0.7 percent to 83.55 yen. New Zealand’s dollar slid 1 percent to 72.80 U.S. cents, and declined 0.9 percent to 66.40 yen. China’s central bank yesterday guided its benchmark one- year bill yield higher for the second time this year in an effort to prevent bubbles emerging in the nation’s property and stock markets. The Shanghai Composite Index dropped 1 percent today, ending four days of gains, and the MSCI Asia Pacific Index declined 0.7 percent. New Zealand Prices New Zealand’s consumer prices slipped 0.2 percent in the fourth quarter, Statistics New Zealand said, compared with the median estimate from economists for them to remain unchanged. Reserve Bank of New Zealand Governor Alan Bollard said last month he expected to keep the benchmark rate at a record low until the middle of this year to stimulate the economy. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates fell to 4.46 percent, near the lowest since Dec. 9, from 4.57 on Jan. 15. Benchmark interest rates are 2.5 percent in New Zealand and 3.75 percent in Australia, 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. Strongest in Decade Australia’s dollar earlier rose to the strongest in a decade versus the euro on speculation the financial problems in Greece will hamper Europe’s economic recovery. European finance chiefs yesterday said Greece’s fiscal crisis is affecting other nations and called on the government to step up its budget-cutting efforts. “The euro is looking very heavy technically and people are getting a lot more concerned over the situation in Greece and other periphery countries,” said Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Sydney. The Aussie may rise to 66.65 eurocents, the high it achieved in 2000, he said. Australia’s currency traded at 64.54 eurocents from 64.61 yesterday after climbing to 64.79, the highest level since September 2000. Australian government bonds fell. The yield on the benchmark 10-year note added four basis points to 5.53 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.29, or A$2.90 per A$1,000 face amount, to 97.99. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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