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The New Zealand dollar plunged to a four-month low following the release of a final vote count for the nation's general election, which failed to name the winner.
The small nationalist New Zealand First Party continues to be main power after the final count revealed that the governing National Party lost some ground against the center-left Labour-Green bloc, compared with the preliminary tally announced on the Sept. 23 poll day.
The New Zealand currency dropped to $0.7060 when markets opened on Monday, its weakest since early June from $0.7090 on Friday evening. It stood at $0.7066 during midday.
NZ First continued negotiations on Monday with both the Labour and National, as it awaits its self-imposed deadline of Oct. 12 to announce which party it would support.
According to Imre Speizer, head of NZ strategy at Westpac, “it remains unclear which way NZ First will swing, and when it will announce its intentions”. As a result, “the election-related uncertainty hanging over NZD markets is likely to persist until the composition of the government is announced.”
Con Williams, economist at ANZ Bank, says “the downward bias for the NZD will likely continue following the tallying of the final vote count”.
The Labour and New Zealand First hopes to hold down immigration, renegotiate particular trade deals and adjust the role of the central bank.
