The New Zealand dollar traded around $0.563 on Tuesday, consolidating after its biggest one-day advance since April in the previous session, as the ruling National Party gained an early advantage in its bid to remain in power. While the final result will not be confirmed until official figures are released on November 27, the National-led coalition currently holds a narrow lead in the race for a parliamentary majority, bolstering expectations that the Reserve Bank’s existing inflation-focused mandate will be maintained.
By contrast, a Labour-led government had been viewed as a potential drag on the kiwi due to its proposal to reinstate the central bank’s dual mandate of employment and price stability, a change that could support a more accommodative monetary stance against the backdrop of a soft labor market.
The New Zealand dollar also benefited from improved risk sentiment after President Trump signaled that further military action against Iran was unlikely as long as diplomatic talks continued, easing concerns over an escalation in regional tensions.
