Quake sends dollar and sharemarket down

9:45 am on 23 February 2011

Tuesday's devastating earthquake in Christchurch caused the New Zealand dollar to tumble and the stockmarket to fall sharply.

The New Zealand dollar fell almost a cent against its US counterpart when the quake hit, and then slipped another quarter of a cent during the afternoon.

The dollar was trading at US76.25 when the quake hit at 12.51pm and has since dropped by 1.5 cents. It was trading at US74.67 cents about 10pm on Tuesday.

Currency analysts say investors are worried about how government finances will cope with the extra costs of rebuilding the Canterbury region.

The New Zealand sharemarket shed 0.7%, while the Australian bourse fell 0.9%.

Stocks in insurance companies, banks and firms based in Christchurch were particularly hard hit.

Meanwhile, Fitch Ratings said it was unlikely to cut New Zealand's AA+ rating because of the quake.

A spokesman for the ratings agency says the quake will have economic consequences as the Government moves to repair damage, but the costs are unlikely to drive ratings changes.

The agency put New Zealand's ratings on watch for a possible downgrade in July last year, due to worries about the country's huge current account deficit and rising external debt.