Long-term investors bet on commodity currencies falling

Tue May 7, 2013 11:55am EDT
 
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* Commodity currencies could see erosion of big gains since 2008

* Fund managers see falls in Australian, Canadian, NZ dlrs

* Some see Aussie as low as $0.95, CAD at C$1.05 in a year

By Jessica Mortimer

LONDON, May 7 (Reuters) - The Australian, Canadian and New Zealand dollars may be set for a decline, dragged down by a slowdown in China and a sharp fall in commodity prices.

Tuesday's 0.8 percent slide by the Aussie versus the U.S. dollar, prompted by a rate cut, was just a foretaste.

The Australian and New Zealand dollars are up 70 percent against the U.S. dollar since late 2008, driven up by near-zero rates in many developed countries. The euro zone crisis also led investors and central bank reserve managers to seek higher-yield, low-risk assets.

The Canadian dollar has gained around 30 percent.

Some analysts see all three currencies as overvalued, with worsening outlooks at home making rate cuts more likely.   Continued...