The Australian dollar strengthened for a second day against the greenback after a Chinese report showed consumer prices rose less than economists forecast, boosting demand for higher-yielding assets. The so-called Aussie also rose toward a nine-month high versus the yen after the Reserve Bank of Australia said in minutes of its February meeting that a “slightly restrictive” policy stance was appropriate as a resources boom boosts incomes. New Zealand’s dollar ended four days of declines against the U.S. currency as Asian stocks advanced. The China “outcome is slightly bullish for the commodity currencies as it’s likely to, on the margin, support the view that some of the fears on the pick-up in Chinese and Asian inflation are perhaps overplayed,” said Todd Elmer, the Singapore-based head of Group-of-10 currency strategy for Asia ex-Japan at Citigroup Inc. “The Aussie is a buy on dips.” Australia’s dollar advanced to $1.0046 as of 3:44 p.m. in Sydney from $1.0029 in New York yesterday. The currency gained 0.2 percent to 83.77 yen, after rising to 83.81 yen yesterday, the strongest since May 13. New Zealand’s dollar traded at 75.68 U.S. cents from 75.67 cents, and was at 63.10 yen from 63.05 yen. China’s consumer prices rose 4.9 percent last month from a year earlier, the statistics bureau said, compared with a 4.6 percent gain in December and a median forecast for 5.4 percent in a Bloomberg survey. China is Australia’s largest trading partner and New Zealand’s second-biggest export market. China Inflation The MSCI Asia Pacific Index of shares rose 0.2 percent, after gaining 1.5 percent yesterday. The Shanghai Composite Index advanced 0.6 percent. Australia’s currency rose against 12 of its 16 major counterparts after the minutes of the RBA’s Feb. 1 meeting showed policy makers said “there had been a stronger tone to the data on the global economy” since they gathered in December. Restraint in consumer spending was slowing inflation and offsetting stronger demand for resources, they said. “The tone of the minutes is consistent with an overall tightening bias,” Michael Turner, a fixed-income strategist at RBC Capital Markets Ltd. in Sydney, wrote in a note to clients. The Reserve Bank will increase its benchmark rate by 35 basis points over the next 12 months, according to a Credit Suisse AG index based on swaps. Benchmark interest rates are 4.75 percent in Australia and 3 percent in New Zealand, compared with as low as zero in the U.S. and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net

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