The New Zealand dollar jumped above 72 US cents for the first time in more than a year as confidence that UK voters will stick with the European Union firmed ahead of today's historic vote.
The kiwi climbed to 72.44 US cents at 8am in Wellington from 71.80 cents at 5pm yesterday. The trade-weighted index climbed to a 13-month high 76.52 and was at 76.46 at 8am from 75.99 yesterday.
Britons are in the final hours of a referendum on whether to stay in the EU, ending several weeks of heightened volatility in financial markets where polls showed the race to be closely run. The Chicago Board Options Exchange's Volatility Index, known as Wall Street's 'fear gauge', dropped from a four-month high, indicating volatility in markets has eased.
Sterling rose to a six-month high against the greenback and equity markets on both sides of the Atlantic rallied on expectations UK voters will choose to stay in the EU.
"The polls for the UK referendum close within a couple of hours, but the market is already trading as if a 'Remain' outcome has already been determined," Bank of New Zealand currency strategist Jason Wong said in a note. "For the NZD there is little technical resistance ahead, a reflection of its recent strength, but on fundamental factors the currency is looking really stretched. In illiquid market conditions over the next 12-18 hours, anything seems possible."
With no local economic data, traders will be watching the outcome of the referendum. UK polling booths close at 9am New Zealand time and the outcome is expected to come during the local trading session.
The kiwi was little changed at 48.68 British pence from 48.55 pence yesterday, and climbed to a year-high 63.68 euro cents from 63.41 cents. It gained to a two-month high 76.73 yen from 75.12 yen yesterday and rose to a 14-month high 4.7615 Chinese yuan from 4.7222 yuan. The kiwi fell to 95.15 Australian cents from 95.45 cents yesterday.