The New Zealand dollar edged around 0.5% higher against the US dollar in very early Asian trade on Monday, the first session since a knife-edge general election left the country facing weeks of political uncertainty. Preliminary results show Prime Minister Christopher Luxon's National-led coalition clinging to a paper-thin majority, with nearly 400,000 special votes still uncounted — a combination that has produced a wait-and-see market rather than a verdict on the election. The early gain looked more like a thin-liquidity start to the week than a judgment on the outcome.

A majority measured in single seats

Preliminary results from Saturday's vote give the National-led coalition 67 seats in an expanded 131-seat parliament. The margin is so narrow that a small shift in the final count could still open a path to power for the left-leaning opposition bloc of Labour, the Greens and Te Pāti Māori, which is projected to hold 57 seats. Nearly 400,000 special votes, including those cast by New Zealanders overseas, have yet to be counted. New Zealand's mixed-member proportional (MMP) system means governments are typically built through coalitions rather than single-party majorities, and final seat allocations can shift once those late-counted ballots are folded in — the mechanics behind a potentially extended bargaining process.

Luxon told supporters in Auckland that his party appeared to have a pathway to government but that the race was too close to call. Final official results from the Electoral Commission are due on November 27, and coalition negotiations could take weeks after that. Labour leader Chris Hipkins did not concede, insisting that every vote must be counted.

Voters focused on cost of living

The result points to deep voter frustration over fuel prices and other living costs, stubbornly high unemployment and healthcare. The government's economic agenda has also been complicated by US tariff uncertainty and the surge in fuel prices driven by the war with Iran.

National's share of the vote fell to around 29% from about 38% in 2023. Its partners ACT and New Zealand First lifted their shares to roughly 11% and 10% respectively, strengthening their hand in any coalition talks and raising the prospect of a government that tilts further to the right.

Willis loss clouds fiscal outlook

One notable casualty for markets is Finance Minister Nicola Willis, who lost her seat along with several other senior National lawmakers. Her defeat leaves questions over who would steer fiscal policy in a second term, adding a further layer of uncertainty over the direction of government spending. The finance portfolio is among the most consequential posts in any New Zealand government, carrying oversight of the budget and core spending decisions.

Opportunity Party emerges as potential kingmaker

The centrist Opportunity Party, led by political newcomer Qiulae Wong, is projected to enter parliament with nearly 6% of the vote — the first outsider party to do so in three decades. Luxon had ruled out working with the party before the election, but he struck a more conciliatory tone on Sunday. Should the coalition fall short once special votes are counted, Opportunity could find itself courted by both blocs as kingmaker.

What it means for the kiwi

The kiwi is a risk-sensitive, freely traded currency, which is part of why global sentiment shifts can outweigh domestic political headlines. Until the final count, the election outcome is likely to remain a background source of uncertainty for the New Zealand dollar rather than a clear directional driver. A prolonged hung outcome would keep a layer of political risk over the currency. In the interim, global risk sentiment, US dollar moves and expectations for the Reserve Bank of New Zealand (RBNZ) are likely to matter more for NZD/USD than the election itself.