NZ dollar drops after magnitude 7.5 earthquake in upper South Island

The kiwi fell to 70.88 US cents as at 8am in Wellington, from 71.26 cents in late New York trading on Friday. The trade-weighted index fell to 76.97 from 77.21.

The New Zealand dollar fell to its lowest level in about a month after a magnitude 7.5 earthquake in North Canterbury left two people dead, triggered tsunami warnings and damaged buildings as far north as Wellington.

The kiwi fell to 70.88 US cents as at 8am in Wellington, from 71.26 cents in late New York trading on Friday. The trade-weighted index fell to 76.97 from 77.21.

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The quake cut off the town of Hanmer Springs, cut power in centres including Kaikoura, blocked roads and closed office buildings in Wellington. PM John Key said Civil Defence officials are to meet at 9am this morning for an update of the damage, while traders at Bank of New Zealand and ANZ Bank said activities were disrupted at their Wellington headquarters. There have been some 50 aftershocks since the major quake at just after midnight.

"The kiwi was under pressure against the US dollar last week but this morning it is all about the earthquake," said Philip Borkin, senior economist at ANZ Bank New Zealand. "Until we get greater clarity I think the bias will remain to the downside." Until then, it wasn't clear if the latest quakes would have the economic impact of the Christchurch quakes or amount to a minor shutdown in Wellington, he said. "Markets don't like uncertainty."

The local currency fell to 75.54 yen from 75.99 yen on Friday in New York. It fell to 93.84 Australian cents from 94.35 cents and declined to 4.8235 yuan from 4.8521 yuan. The kiwi dropped to 56.21 British pence from 56.52 pence and slipped to 65.42 euro cents from 65.62 cents.