By Ana Nicolaci da Costa
WELLINGTON (Reuters) - The leader of the small New Zealand party holding the balance of power after an inconclusive election last month said he would hold a key board meeting on Monday as he nears a decision on which party he will support in a coalition government.
The country has been in political limbo since Sept. 23 when neither the National Party, which has led the government since 2008, or the Labour Party scored enough seats to form a government.
The New Zealand First has held negotiations with both over the past week, but has kept the country guessing over which way it was leaning.
It convened a caucus on Friday, but the internal meetings were set to continue through Monday.
"Members of the board will be ... flying in on Sunday and early Monday morning for a joint caucus and board meeting ... all day Monday," Winston Peters, leader of the nationalist NZ First Party told reporters in Wellington.
An announcement was expected sometime next week.
NZ First's policies are more aligned with those of Labour - both favor curbing migration and foreign ownership, renegotiating certain trade deals and changes to the central bank's approach to monetary policy.
But observers have said that a two-way coalition is much simpler to put together than one involving three parties.
National won 56 seats at the September election, meaning it would only need NZ First's nine seats to have a majority in parliament.
Labour, with 46 seats, will have to go into coalition with both the Greens and NZ First to be able to govern.
"The most widespread criticism of the current state of play is that a party leader with 7.5 percent of the nation's vote has been allowed to dictate the outcome for 100 percent of New Zealanders," Sean Kean, managing director of Auckland-based Triple T Consulting said.
The political uncertainty has pushed the New Zealand dollar down 2.9 percent against the U.S. dollar since the vote. The New Zealand dollar was last 0.07 percent lower at $0.7125.
(Additional reportig by Swati Pandey in SYDNEY; Editing by Simon Cameron-Moore)
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