Kiwi dollar soars against pound, down against greenback

The local dollar surged as high as 52.88 British pence, the highest in almost three years, and was recently at 52.21 pence, from 48.55 pence yesterday. Photo / File

The New Zealand dollar tumbled more than 3 US cents, or 4.4 percent, and swap rates dropped as the UK voted to leave the European Union, confounding the predictions of bookmakers and pollsters.

The kiwi dollar fell to 69.84 US cents at 5pm in Wellington, from as high as 73 cents when voting closed this morning at 9am NZ time and down from 71.80 cents late yesterday.

The local dollar surged as high as 52.88 British pence, the highest in almost three years, and was recently at 52.21 pence, from 48.55 pence yesterday.

Financial markets were wrongfooted by the Brexit vote, with polls calling the outcome too close to call as voting got under way and bookmakers predicting strong support for remaining in the EU.

That carried through the close of the referendum, when Brexit backer Nigel Farage, of the UK Independence party, conceded defeat. However, six hours later and with the Brexit vote firmly in the lead, the BBC declared the result for the 'leave' camp and the British pound dived to a 30-year low.

"The exit polls were completely incorrect on the British elections and quite clearly useless on Brexit.

The market got completely wrong-sided," said Tim Kelleher, head of institutional FX sales at ASB Bank. "Across the board, there's risk off".

Kelleher said there's a high probability of intervention in currency markets by central banks, possibly acting in concert. "I don't think the Bank of England has been in yet."

The vote also "puts any chance of a Fed rate hike on the back foot and absolutely puts an August cut by the RBNZ on the cards," he said. New Zealand's financial markets have been relatively unscathed in the fallout from the Brexit.

The South African rand and Japan's Nikkei 225 Index tumbled more than 7 percent, while New Zealand's S&P/NZX 50 Index has fallen 2.3 percent.

Gold and the yen, typically seen as safe haven investments, both climbed.

"We've come out of it relatively unscathed," Kelleher said.

"We're as far as you can possibly get from all the carnage and we have reasonably attractive yields."

New Zealand's two-year swap rate dropped 14 basis points to 2.17 percent and the 10-year swaps tumbled 21 basis points to 2.65.

The trade-weighted index was recently at 75.36, having earlier soared to 76.90, from 75.99 yesterday. The kiwi rose to 63.88 euro cents from 63.41 cents and slumped to 71.06 yen from 75.12 yen yesterday.

The local currency dropped to 4.6286 yuan from 4.7222 yuan and rose to 95.53 Australian cents from 95.45 cents yesterday.