Currency Crisis
Media speculation followed a leak that an incoming Labour government would be likely to significantly devalue the dollar upon election. The Reserve Bank advised the Prime Minister, Sir Robert Muldoon, that the dollar should be devalued. Muldoon ignored the advice, owing to his belief that it would hurt poorer New Zealanders in the medium term. In June 1984 Muldoon announced a snap election to be held in July. This caused an immediate run on the dollar, as currency speculators believed a Labour win would mean devaluation. Despite a deepening foreign exchange crisis, Muldoon continued to refuse to devalue, forcing the Reserve Bank to take some extraordinary steps, such as the temporary closing the forex markets for a short period of time to slow down devaluation.
On 14 July, Muldoon and National lost the general election, and the Fourth Labour government led by David Lange was sworn in on 26 July.
Read more about this topic: 1984 New Zealand Constitutional Crisis
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