New Zealand’s dollar climbed toward a one-week high against the greenback on speculation Auckland- based Fonterra Cooperative Group Ltd. will raise its forecast for payouts to farmers, boosting the nation’s economic recovery. The kiwi rose for a fourth day before the board of Fonterra, the world’s largest dairy exporter, meets tomorrow after whole milk powder prices climbed to a 31-month high. The Australian dollar fell, retreating from within 0.1 percent of a nine-month high against the yen, as Asian stocks declined after Libyan leader Muammar Qaddafi’s son warned of a civil war following attacks on anti-government protesters by security forces. “Fonterra could be announcing an upward revision to their forecast dairy payout for this season sometime this week,” said Khoon Goh, head of market economics at ANZ National Bank Ltd. in Wellington. “That should be taken positively by the currency markets and could see the New Zealand dollar well supported.” New Zealand’s dollar rose to 76.44 U.S. cents as of 4:34 p.m. in Sydney from 76.16 cents in New York last week, after advancing to 76.57 on Feb. 18, the highest since Feb. 10. The currency gained to 63.54 yen from 63.36 yen. Its Australian counterpart was at $1.0121 from $1.0147 on Feb. 18. The so- called Aussie fell 0.3 percent to 84.12 yen. It touched 84.48 yen on Feb. 18, the most since May 13. Fonterra raised its forecast payment to farmers by 4.5 percent on Dec. 10, citing higher international prices. Whole milk powder prices reached the highest for a near-term contract since July 2008, according to auction results published Feb. 16. Sluggish Recovery New Zealand’s dollar gained against all 16 of its most- traded counterparts as credit card spending rose 3.8 percent in January from December when it fell 1.7 percent, according to a report released by the Reserve Bank today. Spending grew 5.6 percent from a year earlier, the report showed. The currency has still weakened 2 percent this year against the greenback amid a sluggish domestic recovery. Consumers are more pessimistic, with 78 percent saying economic conditions were “poor” or “not so good,” compared with 69 percent in December, according to a UMR Research poll of 1,000 people released today. The poll showed more consumers said it not a good time to buy items they need or want, UMR said in an e-mailed statement. The Reserve Bank of New Zealand will release its first- quarter inflation expectations survey tomorrow. Central bank Governor Alan Bollard will raise the nation’s key rate by 50 basis points over the next 12 months, according to a Credit Suisse AG index based on swaps. That compares with 31 basis points for Australia, a separate index shows. The kiwi dollar rose 0.6 percent to NZ$1.3240 per Australian dollar, advancing for a second day. Aussie Longs Australia’s currency fell against the dollar and yen amid escalating tensions in the Middle East. The MSCI Asia Pacific Index declined 0.2 percent, snapping a three-day rally. “In the absence of major data flow, markets focused on the deteriorating situation in Libya, which kept a lid on risk proxies,” Sue Trinh, a Hong Kong-based senior currency strategist at Royal Bank of Canada wrote in a report to clients. Liquidity in foreign-exchange markets may be thin today due to a holiday in the U.S., she wrote. Futures traders decreased their bets that Aussie dollar will gain against the U.S. currency, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by large speculators such as hedge funds on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 65,514 on Feb. 15, compared with 71,979 a week earlier. 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. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, rose to 3.81 percent from 3.78 percent on Feb. 18. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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