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NZ dollar falls after US election result

NZ NewswireNZ Newswire 9/11/2016 Jonathan Underhill

The New Zealand dollar fell as the greenback recovered from an initial sell-off following Donald Trump's shock US election win as financial markets saw positives for the US economy in his promises to cut corporate tax and boost infrastructure spending, creating more American jobs.

The kiwi dollar traded at 72.72 US cents as at 8am in Wellington from 73.33 cents late on Wednesday. It rose to 76.92 yen having tumbled to 74.66 yen against the so-called safe-haven currency in the immediate market ructions sparked by Trump's win.

Stocks on Wall Street rose, led by banks, healthcare, pharmaceutical companies and those related to construction activity as investors effectively repriced the perceived risks not just of Trump's presidential victory but the clean sweep by the Republicans in the House and the Senate.

"Trump says he will cut the corporate tax rate to 15 per cent and renew all the infrastructure and get growth going," said OMF's Martin Rudings.

"That's going to be good for the American economy. In some parts of the world there may be concerns about trade, but generally the market thinks he's going to get things moving."

Investors had taken some comfort from Trump's conciliatory speech after the results became clear and from US President Barack Obama's comment that Americans were all one team, "and it looks like corporate America endorses his policies", Mr Rudings said.

The fall in the dollar came before Reserve Bank governor Graeme Wheeler cut the official cash rate to a record low 1.75 per cent.

The trade-weighted index slipped to 78.49 from 78.66, still well above the level projected by the RBNZ for the fourth quarter in its August forecasts.

The New Zealand dollar declined to 58.57 British pence from 58.68 pence, fell to 95.29 Australian cents from 96.19 cents, gained to 66.57 euro cents from 65.25 cents and fell to 4.9316 yuan from 4.9639 yuan.

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