NZ dollar holds above 73 US cents as markets weigh up prospect of centre-right govt

The kiwi traded at 73.30 US cents as at 8am in Wellington from 73.39 cents on Friday in New York.

The New Zealand dollar held above 73 US cents after Saturday's general election saw the incumbent National Party win the most votes, putting it in the box seat to negotiate the formation of a new government.

The kiwi traded at 73.30 US cents as at 8am in Wellington from 73.39 cents on Friday in New York, and up from 72.83 cents at last week's local close. The trade-weighted index advanced to 76.66 from 76.33 last week.

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The Bill English-led National Party won 46 per cent of the popular vote on Saturday as it seeks to win a rare fourth term in government, more than the rival Labour-Green bloc with a combined 43 per cent. Both groups need New Zealand First to secure a parliamentary majority, however leader Winston Peters has said he won't make a decision until October 12 when the result is officially delivered to the Governor General.

"Formation of centre-right government seems the most likely scenario, but not guaranteed as negotiations begin this week," ANZ Bank New Zealand rural economist Con Williams said in a note. "While the NZD is expected to find initial support, a lack on final certainty is likely to make markets sensitive to coalition developments."

Locally, investors will be watching Fonterra Cooperative Group's annual result for any update on how the dairy sector is tracking.

The kiwi was also bolstered by weakness in the greenback on Friday as tensions between the US and North Korea remain heightened.

The local currency traded at 61.46 euro cents from 61.41 cents on Friday in New York after exit polls showed Germany returned Angela Merkel's CDU/CSU alliance for a fourth term of government.

The kiwi decreased to 54.26 British pence from 54.38 pence last week and was little changed at 82.10 yen from 82.17 yen. It traded at 92.10 Australian cents from 92.15 cents last week and fell to 4.8304 Chinese yuan from 4.8363 yuan.