The New Zealand dollar took a dive in the last half hour of trading yesterday as Australian investors moved to square up positions ahead of today's federal election.
At 5pm, the kiwi was at US41.83c, having traded around the US42c mark for most of the day.
"Essentially it was pretty lacklustre for most of the day and we were stuck in a very narrow range just above US42c," Bank of New Zealand currency strategist Stu Ritson said.
"Moving into the local close here we have seen kiwi come off and actually fall 20 points down towards US41.80c and the catalyst for that was really a weaker aussie.
"The aussie has done fairly well over the last couple of days and people are squaring up positions ahead of the election this weekend."
The Australian dollar closed at US51.31c from US51.60c at Thursday's local close.
Local retail sales data and revised trade figures had had little impact on the kiwi yesterday, coming in close to economists' expectations, Mr Ritson said.
He expected the kiwi to range between US41.60c and US42c overnight, ahead of the aussie election.
In terms of the result, dealers said a Labour victory would be seen as negative with the left-leaning party likely to stymie further privatisations such as Telstra.
A hung parliament is seen as the worst result for the currencies although that is not considered a high probability.
On the crosses at 5pm, the kiwi was buying A81.53c (A81.47c), 46.96 euro (46.87), 50.32 yen (50.86), 28.79 pence (28.73), 91.83 marks (91.68), and 68.78 Swiss francs (68.00). The Australian dollar was buying $NZ1.2266.
The trade-weighted index was at 49.70 (49.86), and the Monetary Conditions Index eased slightly to minus 908 (minus 891).
Ninety-day bank bills were steady at 4.86 per cent. Bond yields were sharply higher were the March 2002s at 4.76 per cent (4.74), the April 2004s at 5.00 per cent (4.93), the November 2006s at 5.53 per cent (5.46), and the November 2011s at 6.04 per cent (5.57).
- NZPA
<i>Currency:</i> Kiwi comes off as Aussies square up
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