NZ dollar holds at US77c after quakes

New Zealand dollar. Photo / NZ Herald

The New Zealand dollar held steady on 77 US cents following a 5.8 magnitude earthquake in Christchurch at 1.58pm this afternoon.

The kiwi fell to 77.49 at 4pm, from 77.51 US cents at 1.58pm. This was up from 77.36 US cents at 9am and 76.78 US cents at 5pm yesterday.

The earthquake cut power and phone services to the central city and was 8km deep, centered 20km north east of Lyttelton. It was followed by a second jolt moments later, and several aftershocks have also been recorded, including another major shake at 3.19 p.m.

The quakes immediately sparked speculation that the Reserve Bank of New Zealand would cut the Official Cash Rate because of the implied delay to Christchurch rebuilding effort. But Christian Hawkesby, at Harbour Asset Management in Wellington, said that was unlikely.

However, the latest quakes would make the central bank even less likely than before to raise interest rates.

The RBNZ's last monetary policy statement, early this month, made clear there was no case for lowering interest rates even if the global economy worsened significantly, and further quakes in Christchurch could be seen as a similarly jarring event for the local economy.

"Our initial view...is that it delays the RBNZ going into hiking rates," he said. "The Reserve Bank will sit on its hands," Hawkesby said.

The kiwi rose to 60.47 yen from 59.9 yen yesterday, and 49.35 British Pence from 49.01 British pence. It advanced to 76.11 Australian cents from 76.1 cents and was up 59.27 euro cents from 58.8 cents yesterday.

The trade-weighted index was little changes at 69.16 from 5pm yesterday.