The New Zealand dollar jumped as much as 1 per cent on Tuesday following the release of a new poll showing the governing National Party could rule alone after the country’s general election on September 23.
The Kiwi strengthened to a high of $0.7284 against the dollar, up from $0.7215 earlier in the day.
Shamubeel Eaqub, an economist with Sense Partners, says the New Zealand dollar has been “spiking up and down” on the polls, which continue to be “all over the place”.
“There is really no big policy shift that will affect the New Zealand dollar even if there is a change in government,” Eaquab says.
However, he notes that fundamentals are turning against the Kiwi.
The “rates gap will gradually close as Fed raises and, looking at history, the slump in house sales suggests that the economy and New Zealand dollar will weaken”.
The poll, published by Newshub and Reid Research, has National, the centre-right party which has governed since 2008, up 4 per cent to 47.3 per cent. The main opposition party, Labour, is down 1.6 per cent to trail by 10 points at 37.8 percent.
The biggest of the minor parties was New Zealand First, which has looked likely to hold the balance of power after the election, slipped 0.6 per cent to 6 per cent. Of note, the Green Party dropped 1.2 per cent to 4.9 per cent – below the 5 per cent threshold needed to re-enter parliament – meaning that National would have 61 seats in a 121-set government.
Earlier polls had Labour looking likely to be able to form a government.