By Candice Zachariahs Feb. 17 (Bloomberg) -- The Australian dollar traded near its strongest level this month as traders increased bets the central bank will raise its benchmark rate in March, spurring demand for the nation’s assets. New Zealand’s dollar was near a two-week high as stocks and commodities rallied around the world on improved earnings at Barclays Plc and after the Greek Finance Minister said his nation won’t need a bailout. Swaps traders raised to 40 percent the chance the Reserve Bank of Australia will boost its benchmark on March 2 after policy makers said in minutes of their previous meeting released yesterday that further increases would likely be necessary. “The RBA minutes made reference to higher interest rates later in the year, which sparked a rally,” said Euan McCreadie, a senior corporate dealer at online foreign-exchange firm OzForex Ltd. in Sydney. “The Aussie will probably have a go at the 90.40 to 90.50-cent level, but it will probably be capped there,” he said, using the Australian dollar’s nickname. Australia’s currency traded at 90.11 U.S. cents as of 4:23 p.m. in Sydney from 90.22 cents in New York yesterday, when it climbed to 90.28, the strongest since Jan. 28. The currency rose to 81.40 yen from 81.32 yen. New Zealand’s dollar bought 70.56 U.S. cents from 70.72 yesterday, when it rose to 70.80 cents, the highest since Feb. 3. The so-called kiwi was little changed at 63.74 yen. An Australian index of leading economic indicators rose in December to the most in more than a year, Westpac Banking Corp. and the Melbourne Institute said in a report today. The gauge climbed 0.5 percent from November to 256.4. Improving Outlook The index’s improvement put “the growth outlook back on par with that seen in 2007 at the height of Australia’s resources boom,” said Matthew Hassan, senior economist at Westpac Banking Corp. in Sydney. Commodities including iron ore and coal account for the majority of Australian exports. A separate index measuring the number of jobs available for skilled workers in Australia rose 1.6 percent in February from January, a government report showed today. Australia’s currency yesterday rose above 90 cents for the first time this month as the Reuters/Jefferies CRB Index of 19 raw materials advanced the most since November. The MSCI Asia Pacific index gained for a second day today, adding 1.9 percent. Jobless Rate Demand for New Zealand’s dollar was tempered after the Labor Department said the unemployment rate may rise further before peaking in the middle of 2010. The jobless rate climbed to the highest level in more than 10 years last quarter, a report showed Feb. 4. Benchmark interest rates are 3.75 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. Australian government bonds were little changed with the yield on the benchmark 10-year note at 5.52 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.21 percent from 4.20. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

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