By Candice Zachariahs Jan. 22 (Bloomberg) -- The Australian and New Zealand dollars fell against the yen, extending the biggest weekly loss since November, as Asian stocks tumbled on U.S. President Barack Obama’s proposal to limit risk-taking at banks. The two currencies also headed for weekly declines against the greenback on concern China will take further measures to stop its economy from overheating, damping demand for higher- yielding assets. The People’s Bank of China yesterday pushed up bill yields to reduce funds in the banking system and prevent bubbles in the property market. “Bank stocks have fallen on the back of Obama’s proposal driving equity weakness and a general paring back of risk,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington. “The momentum is pretty strongly to the downside but we do feel overcooked and due a bounce.” Australia’s currency fell to 81.24 yen as of 4:08 p.m. in Sydney from 81.37 yesterday in New York, extending this week’s decline to 3 percent. It rose 0.3 percent to 90.29 U.S. cents, still heading for a 2.2 loss this week. New Zealand’s dollar slipped to 64.13 yen from 64.22 yesterday, poised for a 4.3 percent drop over the past five days. The so-called kiwi climbed to 71.29 U.S. cents from 71.01 yesterday, having slumped 3.4 percent this week. Weekly Decline New Zealand’s dollar has weakened against all of the 16 most-active currencies this week, and Australia’s is down versus 13, as investors sold growth-sensitive currencies on concern the global recovery is losing momentum. The Shanghai Composite Index is headed for its worst week since Nov. 27, dropping 4.2 percent, and the MSCI Asia Pacific Index of regional shares has lost 4 percent. Australia’s dollar also fell for a third day against the yen as the nation’s benchmark S&P/ASX 200 Index slid the most in two months on concern the government will change the way it taxes mining companies. A review of Australia’s tax system may recommend taxing mining projects in the same way as energy projects, a change that would have raised an extra A$14 billion ($12.6 billion) over the past three years, the Sydney Morning Herald reported, citing Treasury estimates. “The uncertainty that is creeping into markets combined with key technical breaks should be a significant warning that a more sustained change in trend is occurring,” said Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Sydney. “It is time to close down some of the higher risk currency and market positions.” A break of the 87.35-cent December low in the Australian dollar may mark a “significant turn” for the Aussie, he said. Losses Overdone The two currencies gained versus the greenback today, paring weekly declines, on speculation their more than 2 percent losses this week have been too rapid. Gains in Australia’s dollar will be limited to 90.40 cents and New Zealand’s may be sold near 71.40 cents today, Allen said. Australian government bonds rose for a second day. The yield on the benchmark 10-year notes fell 10 basis points to 5.42 percent, according to data compiled by Bloomberg. The 5.25 percent security due March 2019 gained 0.73, or A$7.30 per A$1,000 face amount, to 98.73. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 4.43 percent. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

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