By Oliver Biggadike and Lukanyo Mnyanda Nov. 30 (Bloomberg) -- The dollar fell against the Australian and New Zealand currencies after the United Arab Emirates’ central bank said it “stands behind” the country’s lenders, reviving demand for higher-yielding assets. The greenback dropped for the first time in three days against the euro after the Abu Dhabi-based authority said yesterday banks will be able to borrow using a special facility tied to their current accounts. The euro also rose after a report showed European consumer prices increased for the first time in seven months. “Everybody’s coming back to a dollar-under-pressure story,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “Now that the U.A.E. is coming in to help, people are relieved.” The dollar weakened 0.2 percent to $1.5023 per euro at 8:48 a.m. in New York, from $1.4988 on Nov. 27. The yen declined 0.3 percent to 130.01 per euro, from 129.67 at the end of last week. The yen was little changed at 86.54 per dollar, compared with 86.53. It touched 84.83 on Nov. 27, the strongest in 14 years. Australia’s dollar jumped 0.9 percent to 91.41 U.S. cents and the New Zealand currency appreciated 0.6 percent to 71.54 cents on speculation investors will increase carry trades, in which they buy higher-yielding assets with amounts borrowed in nations with low interest rates. The benchmark lending rate of zero to 0.25 percent in the U.S. makes its currency popular for funding such transactions. The MSCI World Index of stocks advanced 0.4 percent after the U.A.E central bank said yesterday lenders will be able to borrow money from the regulator at a half-percentage point above the three-month local benchmark interest rate. U.S. stock-index futures were little changed. Dubai World’s Debt Dubai World, which is struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities until at least May 30, 2010. The announcement led to a slump in global equity markets and raised the prospect of new loan losses for U.A.E. and foreign banks. Abdulrahman Al Saleh, director general of Dubai’s Department of Finance, said in a state television interview today that the government hasn’t guaranteed Dubai World’s debt. “Dubai debt concerns definitely dominated trading last week,” John Hydeskov, a currency analyst in Copenhagen at Danske Bank A/S, said in a Bloomberg Television interview. “I’m a little less concerned, but there are some issues out there that need to be resolved.” The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, fell 0.4 percent to 74.713. It has decreased 2 percent in November. Yen Versus Dollar Bank of Japan Governor Masaaki Shirakawa said today in Nagoya, Japan, that it’s up to the government to decide whether to act on currency markets. Japan hasn’t sold its currency since March 16, 2004, when it was at about 109 per dollar. The BOJ sold 14.8 trillion yen ($172 billion) in the first three months of 2004, after record sales of 20.4 trillion yen in 2003. Japan last bought the currency in 1998 as the rate fell as low as 147.66. One-week contracts granting the right to buy the yen versus the dollar rose last week to a premium of 2.1 percentage points relative to options for selling Japan’s currency, according to Bloomberg data. The odds of the yen strengthening past 84.83 per dollar to 84.5 by the end of March rose to 80 percent, options data compiled by Bloomberg show. Stronger Franc The Swiss franc gained as much as 0.1 percent against the euro to trade at 1.5052 on speculation that Switzerland’s economy will outperform its peers as the global recovery takes shape. It was later little changed at 1.5069. The franc appreciated 0.4 percent to 1.0037 per dollar. The number of wagers on a gain in the franc against the dollar exceeded bets on a decline by 10 times this month, data from the Commodity Futures Trading Commission showed. That’s the widest gap since the fourth-quarter of 2004, when the currency was rallying 9.3 percent versus the greenback. Underscoring their optimism, traders drove the franc to parity with the dollar last week for the first time since April 2008. The euro climbed 0.4 percent to 91.15 U.K. pence after the European Union statistics office in Luxembourg said consumer prices in the 16-nation region rose 0.6 percent this month from a year earlier, after falling 0.1 percent in October. Economists had projected a gain of 0.4 percent, according to the median forecast of 30 economists in a Bloomberg survey. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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