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The New Zealand and Australian currencies continued their bearish trends against the Japanese yen today and dropped on Forex market during the Asian trading session, as the Japanese stock market plunged.

The popularity of the carry trade using the Aussie and Kiwi as the long currencies and the yen as a short currency is currently experiencing a downtrend that lasts since the 26th of February. Investors prefer converting to the yen in order to buy the low-risk Japanese loans.

Some analysts are confident that the Australian and New Zealand dollar with their high interest rates (and the eagerness of the central banks to increase them even more) won’t be able to perform well during the current global financial crisis and overall risk-averting sentiment. According to them the best times for those currencies has already passed.

The Australian dollar went down from 94.91 to 94.48 against the Japanese yen today, while NZD/JPY rate changed from 81.11 to 80.89 during the Asian session.

If the U.S. economic statistics this week will be as poor as it was in the last week, AUD/JPY and NZD/JPY risk to continue trending down.

The Reserve Bank of New Zealand Governor, Alan Bollard, said yesterday that he won’t be reducing the country’s key interest rate from its record high value in 2008, because the national inflation still remains the major concern.

In the fourth quarter of 2007 New Zealand CPI increased 3.2% — above the central bank’s target of 3.0%. In the same time economy grew 3.7% — its best expansion since 2004 and above the median forecast by the market analysts.

As Bollar said, the current 8.25% key interest rate is an appropriate level that is able to hold down the inflation and is still low enough to allow the country’s economy to go up at a desired pace. Nevertheless, he expects the growth to moderate slightly this year as the drought may weaken farming sector, the lack of liquidity can hurt the real estate sector and the overvalued currency diminishes the exporters’ revenues.

NZD/USD rose from 0.7903 to 0.7972 this week, gaining almost 0.9% but it has been moving generally sideways on Forex during last 30 days.