The New Zealand dollar fell to a week-low after Finance Minister Grant Robertson set out the coalition government's fiscal plans, confirming that they would be funded by slower debt repayment, cancelling tax cuts and by ordering ministers to weed out low-priority spending.
The kiwi traded at 68.29 US cents as at 8:30am in Wellington from 68.33 cents just before Robertson's speech was released and down from 68.46 cents late yesterday. The trade-weighted index fell to 72.14 from 72.25.
Robertson told an ANZ Breakfast in Auckland that the new coalition government aimed to move "beyond narrow economic indicators and measures of success, and instead puts the well-being of our people and the environment at the centre." But he also pledged a "commitment to responsible fiscal and economic management" and reiterated plans to overhaul the Reserve Bank Act to "provide monetary policy support to our goal of improving the well-being of New Zealanders, including focusing on maximising employment." More details of the fiscal plans would be in the Half Yearly Economic and Fiscal Update, set for Dec. 14.
Sheldon Slabbert, a sales trader at CMC Markets in Auckland, said the financial markets "have been fairly negative on Labour's policies" but many of the forces driving the kiwi dollar were "already baked into the cake prior to Labour taking over."
"The kiwi will remain under pressure as interest rate differentials go against us," he said.