NZ dollar falls as NZ First backs Labour-led government
Oct. 19 (BusinessDesk) - The New Zealand dollar fell after NZ First leader Winston Peters said he would support a Labour-led government, saying the nation voted for change, and that he expected a change to the Reserve Bank Act.
The kiwi dropped as low as 70.62 US cents and was trading at 70.65 cents as at 7.15pm from 70.94 cents before he started his briefing. The local currency started declining amid reports the incumbent National Party baulked at NZ First's demands for ministerial posts.
"The majority of this country has voted for the change that is happening," Peters told a briefing in Wellington.
Peters said his party believed an economic slowdown is "already here" and those risks fed into the decision made. He didn't provide any details on ministerial posts, but did say NZ First didn't secure the finance portfolio. He did say he's been offered the deputy prime ministership.
New Zealand's financial markets have been in a state of flux since the Sept. 23 election which left NZ First holding the balance of power and once special votes were counted the gap between National and the Labour-Green bloc got even tighter.
Before today's announcement traders had said a National-led administration would probably stoke a knee-jerk jump in the currency whereas a Labour-led government would push it lower.
Peters said NZ First has a coalition agreement with Labour while the Green Party has a confidence and supply agreement and will sit outside cabinet.
On policy concessions, Peters confirmed he expected the Reserve Bank Act to change, and that he anticipated there were be "fewer people coming here". He also expected 10,000 affordable homes to be built every year to help boost ownership for first-home buyers.
Peters said the major decisions have been made, and that he expects to be able to sort out any further things that crop up as they arise.