Ardern said her government declared the emergency and "pulls out all the stops to curtail the spread of Covid-19.
"We need all the tools at our disposal to ensure everyone reduces down contact with one another across the board," Ardern said as the country counts down to complete lockdown at midnight.
The domestic currency weakened into the announcement but then strengthened after it.
"Things are incredibly volatile," said Mike Shirley, a dealer at Kiwibank. While a state of emergency wouldn't normally be something to celebrate, "we're in this weird world" where the fact that New Zealand has moved ahead of other nations is viewed as a positive.
The kiwi's strength is also partly due to rising hopes that the US congress will pass a US$2 trillion ($3.4t) rescue package for workers and companies after protracted wrangling.
"It's very much driven by hope that the US will get something across the line but, at this stage, it's still very much a hope," Shirley said.
The past 48 hours has mostly been positive for the kiwi but it may not stay that way.
"Everyone's trading on headlines and interpretations of those headlines. They could swing back the other way in a heartbeat," Shirley said.
New Zealand's tally of those infected with covid-19 jumped to 205 today, up from 155 yesterday, and the director-general of health, Ashley Bloomfield, expects the number of cases will continue to increase for at least the next 10 days before turning around.
Worldwide, those infected jumped to 422,829 from 378,860 yesterday and deaths now total 18,907. No local deaths have been recorded yet.
The New Zealand dollar was trading at 97.61 Australian cents from 97.60 cents at 5pm yesterday. It was at 49.46 British pence from 49.71, at 54.02 euro cents from 53.53, at 64.86 yen from 63.76 and at 4.1271 Chinese yuan from 4.0973.
The bid price on the two-year swap rate closed at 0.5800 per cent from 0.5825 yesterday while 10-year swaps were at 1.0550 per cent from 1.0100 per cent.
