The New Zealand dollar fell after the magnitude 7.5 earthquake in the upper South Island although the interest rate market showed no concerns that the Reserve Bank would cut interest rates as it did after the 2011 quake in Canterbury.
The kiwi fell to 70.98 US cents as at 5pm in Wellington from 71.26 cents in late New York trading on Friday. The trade-weighted index slipped to 77.18 from 77.21.
The quake at just after midnight blocked highways, cut power, water and phone lines to some small centres and left two people dead as residential buildings collapsed. However, listed property companies reported little damage and a tsunami threat was downgraded even amid aftershocks that were as strong as magnitude 6.2. There was no expectation of an emergency rate cut such as the central bank made in March 2011 to bolster the economy after the devastating Christchurch quake on Feb. 22 of that year.
"Interest rate market expectations are watched closely and haven't changed too much," said Alex Hill, head of corporate FX at NZForex. The market sees only a 4.5 per cent chance of a rate cut by February, when the Reserve Bank releases its next monetary policy statement.
The New Zealand dollar had tested a key support level of 70.80 US cents in the wake of the earthquake only to rise again and it would take a major downward movement in risk assets to push the kiwi lower, he said. There was a lot of buying interest in the kiwi between 69.70 US cents and 70.80 cents, he said.
Wellington's CBD, where broken windows fell into the streets during the big shake, was subdued after Civil Defence warned people to stay away while engineers checked buildings. Schools were closed for the day. There have been almost 400 aftershocks.
The local currency rose to 76.22 yen from 75.99 yen on Friday in New York. It fell to 94 Australian cents from 94.35 cents and declined to 4.8431 yuan from 4.8521 yuan. The kiwi regained its ground against the pound to trade at 56.50 British pence from 56.52 pence and rose to 65.70 euro cents from 65.62 cents.
New Zealand's two-year swaps were up 1 basis point to 2.24 per cent while the 10-year swap rate rose 10 basis points to 3.28 per cent.