Kiwi drops after coalition announcements

  • 24/10/2017
Kiwi drops after coalition announcements
Photo credit: Getty

The New Zealand dollar fell on Tuesday after Government policy details emerged in Labour's coalition agreement between Labour and NZ First and the confidence and supply deal with the Greens.

The kiwi slipped to US69.44c as at 5pm from US69.61c as at 8am in Wellington.

Prime Minister-elect Jacinda Ardern released the agreements with the two parties, promising to "work together to provide New Zealand with a transformational Government".

The kiwi had pushed higher during the local trading session, touching US70.03c, in "what was really a partial recovery after being pummelled for the last few days", said Westpac senior strategist Imre Speizer.

"Then we got some details of the coalition agreement and it's reacting in a negative way."

Mr Speizer said there is nothing specific in the agreements justifying a fall in the kiwi but the market may have been looking for more details and was disappointed.

"It was a taste but not enough to form a confident opinion on what the policies mean for the economy."

Among other things, Ms Ardern said the new Government was determined there would be a "ban" on the sale of existing homes to non-resident foreign buyers, but remained opaque on how that might be achieved.

Regarding comments on the review of the Reserve Bank Act, Mr Speizer said the announcement actually reduces some uncertainty as Ms Ardern specified it won't include exchange rate targeting but will include a labour market reference.

The kiwi also fell to AU88.78c from 89.07c.

The kiwi dropped to 78.69 yen from 79.11 yen Monday after Japanese PM Shinzo Abe's ruling coalition had a convincing election win over the weekend, ensuring the continuation of stimulatory monetary policy.

The local currency decreased to 52.52 British pence from 52.76 pence. It traded at 4.6025 yuan from 4.6065 yuan and at 59.01 euro cents from 59.11c.

NZN