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New Zealand Dollar Slumps to Two-Month Low After Earthquake

NZ Dollar Drops Against Dollar, Yen After Christchurch Quake
A man runs for cover in Christchurch. Photographer: Martin Hunter/Getty Images

New Zealand’s currency slid to the lowest since December against the U.S. dollar after a magnitude 6.3 earthquake killed at least 65 people and toppled buildings in Christchurch, the nation’s second-largest city.

The kiwi, as the New Zealand dollar is nicknamed, slid versus all of its 16 most-traded counterparts after the temblor, which followed a quake in September. The kiwi and Australia’s dollar also fell as investors sold higher-yielding assets after violence flared in Libya.

“The earthquake has caught the market in a risk-averse mood anyway with the yen strengthening and oil prices rising on tensions in the Middle East,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp, Australia’s second-largest lender.

New Zealand’s dollar dropped as much as 2.4 percent to touch 74.55 U.S. cents, the lowest level since Dec. 23, before trading at 74.85 U.S. cents at 12:41 p.m. in New York, down 2 percent from 76.38 cents yesterday. It tumbled as much as 2.7 percent to 61.83 yen, the weakest level since Dec. 23. The kiwi’s declines against both currencies were the biggest on an intraday basis since July.

Australia’s currency weakened 1 percent to 99.94 U.S. cents, from $1.0094, and fell 1.4 percent to 82.74 yen.

Stephen Roberts, a senior economist at Nomura Australia Ltd., predicted damage and disruption from today’s earthquake may lower New Zealand’s first-quarter gross domestic product to “about flat” from the 0.8 percent he forecast previously. The central bank will likely raise its benchmark rate by 25 basis points this year to 3.25 percent, he said, cutting an earlier estimate for three rate increases beginning in April.

Libyan leader Muammar Qaddafi said today he’s leader of a revolution that requires “sacrifice until the end of life,” defying a widening revolt that has left corpses on the streets in the capital, Tripoli, and rebels claiming control of the second-biggest city, Benghazi. He spoke on state television.

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