By LIAM DANN
A rumour that New Zealand faced an outbreak of foot and mouth disease, which caused the dollar to plummet, may have been malicious.
The unfounded rumour, which swept British financial markets on Wednesday night, died almost as soon as it started but still wiped more than a
cent off the dollar as speculators bailed out.
Agriculture Minister Jim Sutton quickly denied the story.
Cathie Bell, a spokeswoman for Mr Sutton's office, said it appeared to be coincidental that the foot and mouth rumour circulated hours before speculation that a New Zealand patient had symptoms similar to Creutzfeldt-Jakob Disease (CJD) - the human form of BSE or mad cow disease.
Jason Soanes, a senior currency dealer at the ANZ Bank, said: "Rumours like this tend to float through the market every six months."
Sometimes they were based on misreporting about sick animals around the country but this rumour appeared to have no obvious sources, he said.
"We think it was possibly maliciously started in Europe."
An outbreak of foot and mouth would result in an immediate ban on sheep and beef exports and significant restrictions on the dairy sector, and would plunge the economy into recession.
The Reserve Bank estimates an outbreak would wipe $10 billion - or 8 per cent - off GDP. About 20,000 jobs would be lost, although the bank notes this could be underestimating the wider impact.
An outbreak in the UK two years ago hurt the tourism sector as tight restrictions on access to rural land were introduced.
The dollar's value dropped from US58.5c to US57.4c in the 24 hours from 5pm on Wednesday.
Herald Feature: Foot-and-mouth disease
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