New Zealand constitutional crisis, 1984

The New Zealand constitutional crisis of 1984 was an important constitutional and political event in the history of New Zealand. The crisis arose following the 1984 general election, and was caused by a major currency crisis. The crisis led the incoming government to review New Zealand's constitutional structures, which resulted in the Constitution Act 1986.

Prior to 1985 the New Zealand dollar was controlled centrally by the Reserve Bank of New Zealand at an exchange rate fixed to the United States dollar. In early 1984 the Deputy Governor of the Reserve Bank, Roderick Deane, became concerned that the New Zealand dollar had become significantly overvalued and was vulnerable to currency speculation on the financial markets in the event of a "significant political event".

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 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.

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