NZ dollar trades near 5-month low as coalition policies awaited
By Jonathan Underhill
Oct. 24 (BusinessDesk) - The New Zealand dollar traded near a five-month low, having sold off when the new government was announced, as traders await details of the coalition's policies.
The kiwi dollar traded at 69.61 US cents as at 8am in Wellington from 69.63 cents late yesterday, when it touched 69.29 cents, the lowest since late May. The trade-weighted index was at 73.59 from 73.60.
The NZ Herald reported that Winston Peters is set to become deputy prime minister and foreign minister in the new Labour-New Zealand First government, while the Greens will get ministers for the first time but there has been little policy detail so far. Changes are likely to include a reduction in net migration from record levels and changes to the Reserve Bank Act and the new administration also has to approve a new central bank governor.
"The NZD is showing signs of forming a base after its initial swoon following the formation of a new government," said Jason Wong, currency strategist at Bank of New Zealand, in a note. "Today we’ll be on tenterhooks awaiting the possible release of coalition agreements and agreed policy positions."
The kiwi traded at 79.13 yen, near a month-low, from 79.11 yen late yesterday after Japanese PM Shinzo Abe's ruling coalition had a convincing election win over the weekend, ensuring the continuation of stimulatory monetary policy.
It traded at 89.21 Australian cents from 89.07 cents late yesterday and was at 52.74 British pence from 52.76 pence. It traded at 4.6200 yuan from 4.6065 yuan and at 59.27 euro cents from 59.11 cents.