Uncertainty over who will form the new Government saw the kiwi dip to two-week lows today.
The kiwi hit a session low of US69.86 -- its weakest since September 1 -- after Saturday's election ended in a stalemate.
The Labour Party will have the first chance to form a government after winning 50 seats against the National Party's 49.
With over 200,000 special votes to count as well as coalition talks to negotiate, the final word on who will form the new Government is not expected for up to two weeks.
At 5pm the kiwi was buying US69.97c, against US70.76c at Friday's local close.
Traders said the kiwi was likely to remain volatile until the final votes are counted, although a steep fall is unlikely given the strong demand for high-yielding currencies.
Tonight is the first chance for offshore dealers to consider Saturday's result. The kiwi is also likely to come under selling pressure as the close outcome of Sunday's German election dashed hopes for economic reforms and weighed on the euro.
Germany is also in political limbo as the conservative opposition scratched out a narrow election victory over Chancellor Gerhard Schroeder's Social Democrats but crucially failed to secure the ruling majority it had demanded.
On the data front this week, local current account figures on Wednesday are expected to hurt the kiwi, while a US Federal Reserve interest rate decision on Tuesday is expected to deliver a greenback supportive rate rise.
The following are Reuters currency rates:
NZ dlr US69.97c US70.76c
NZ dlr/Aust dlr A91.53c A91.86c
NZ dlr/euro 0.5758 0.5748
NZ dlr/yen 77.99 78.11
NZ dlr/stg 38.80p 38.99p
NZ TWI 70.51 70.80
Australian dollar US76.46c US76.93c
Euro/US dollar US1.2152 US1.2296
US dollar/yen 111.52 110.55
- NZPA
<EM>Currency:</EM> Kiwi dollar falters after uncertain election
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