The dollar started about 0.4% lower around $0.7435 but later edged back up to $0.7469 in light trading.
The benchmark ASX/S&P 200 fell in early trading on Monday before rising 0.3% following a gain in commodities.
Neither the ruling Liberal-National Coalition nor the opposition Labor parties secured an outright majority.
The result won`t be decided until at least Tuesday, which is when vote-counting resumes.
The uncertainty and an increased risk of Australia having it`s "AAA" credit rating cut has "dented" the country`s currency, Vishnu Varathan from Mizuho Bank said.
Australia`s central bank is also expected to hold fire at its policy meeting on Tuesday, analysts Capital Economics said:
"The fallout on the economy and financial markets from the uncertain outcome of the Federal election will probably be relatively mild and short-lived and is unlikely to prompt the Reserve Bank of Australia to cut interest rates from 1.75% to 1.50%.
"It is concerns over the weak outlook for inflation, not the political outlook, that will trigger a rate cut to 1.50% in August," it said in a report.
Elsewhere in Asia
Asian markets are mostly rising as traders turn their focus from the UK`s decision to exit the European Union to the prospect of policymakers unleashing more easing measures to boost growth.
Japan`s Nikkei 225 has also reversed earlier losses and rose 0.7% in the afternoon session. South Korea stocks are 0.4% higher.
In Greater China, the Shanghai Composite gained 1.8% and Hong Kong`s Hang Seng rose 1.5%.
One stock not doing well though is Chinese property developer Vanke, which is undergoing a contested restructuring.
Its shares were suspended from trading in Shenzhen after plunging by the daily 10% limit.
Australian political limbo drives dollar lower
04 July 2016
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The Australian dollar weakened after the country`s election over the weekend ended up too close to call, raising the prospect of a hung parliament.
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