New Zealand's Currency Tumbles

The New Zealand dollar dropped for the first time in five days after the city of Christchurch was damaged by a 6.3 magnitude temblor.

The Australian dollar also declined as investors sought the perceived safety of the greenback and yen on concern over escalating tensions in the Middle East after Bahrain and Libya’s sovereign credit ratings were cut yesterday. New Zealand’s dollar earlier reached the highest in more than a week against the yen on speculation Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, will raise its forecast for payouts to farmers today, boosting the nation’s recovery.

“The market was long kiwi waiting for the Fonterra announcement and news of the earthquake in Christchurch has knocked the kiwi lower,” said Tim Kelleher, vice-president of institutional banking and markets at Commonwealth Bank of Australia in Auckland. A long position is a bet an asset will appreciate.