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NZ dollar drops to 5-month low as Nats lose two seats

NZ dollar drops to 5-month low as Nats lose two seats, Fed hike odds rise

By Jonathan Underhill

Oct. 9 (BusinessDesk) - The New Zealand dollar fell to a five-month low after the National Party lost two seats after special votes were counted while market bets on a Federal Reserve rate hike in the US increased.

The kiwi fell to 70.53 US cents as at 8am in Wellington from 70.92 cents in New York on Friday. The trade-weighted index declined to 74.71 from 75.11.

The kiwi dropped as traders reacted to the potential for a change of government to one that may be less market-friendly after Labour and the Greens both took one seat from National. That put the ruling party with 56 seats to Labour-Greens with 54 although it hasn't altered the position of NZ First as king/queen maker.

"Political uncertainty is weighing heavily on the currency as investors wait to see which of the major political parties New Zealand First will side with," traders at HiFX said in a note. "A mixed September US employment report led to a spike in volatility late on Friday night."

In the US on Friday, payrolls data showed that economy unexpectedly shed 33,000 jobs last month, reflecting hurricane disruptions, although wage inflation rose and the jobless rate fell. The greenback jumped on the figures before falling again on reports that North Korea is preparing to test a missile capable of reaching the US West Coast.

The kiwi fell to 60.10 euro cents from 60.34 cents on Friday in New York. The local currency fell to 53.95 British pence from 54.15 pence and dropped to 90.68 Australian cents from 91.07 cents. It traded at 4.6926 yuan from 4.7099 yuan and dropped to 79.47 yen from 79.77 yen.

(BusinessDesk)

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