The New Zealand dollar dropped sharply against the U.S. dollar and euro on Monday after news of a capital gains tax on New Zealand property investments added to speculation that interest rates will be cut in coming months.The kiwi fell half a cent to $0.7421, while its Australian counterpart leapt 0.7 percent to NZ$1.0794. The euro popped to a three-month peak of NZ$1.5381 to be last at NZ$1.5395, having gained a whopping 15 cents since late April.
Much of the pressure came after New Zealand's government on Sunday said that income gained on residential properties sold within two years of purchase would be taxed at up to 33 percent.
Traders said the move may pave the way for the Reserve Bank of New Zealand (RBNZ) to cut interest rates later this year if they succeed in lowering record-high house prices.
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