The New Zealand dollar rose as investors favoured commodity linked currencies after oil advanced on optimism a decrease in supply would bolster prices.

The kiwi increased to 67.10 US cents at 8am in Wellington, from 66.51 cents at 5pm yesterday. The trade-weighted index gained to 72.83 from 72.28 yesterday.

Equity markets rose as the price of oil and other commodities pushed higher, signalling investors are feeling more upbeat about the outlook for higher risk assets. That bolstered demand for commodity currencies such as the kiwi.

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The more upbeat mood follows a report by the International Energy Agency saying it expects US shale-oil production to fall by 600,000 barrels a day in 2016 and another 200,000 barrels a day in 2017. It also said that it expects global supply and demand to rebalance in 2017, with a corresponding recovery in oil prices from around US$30 a barrel. The hope for a deal on a production freeze led by Saudi Arabia and Russia, the two largest producers, also remains.


"The risk-on move was driven by commodities," Bank of New Zealand currency strategist Jason Wong said in a note. "Sentiment was boosted by the International Energy Agency report on the oil outlook."

Still, BNZ's Wong said oil may retreat again should a deal fail to eventuate between Russia and Saudi Arabia. The Russian oil minister has said that discussions on a deal to cap oil production levels must be completed by the end of this month.

In New Zealand today, the Reserve Bank of New Zealand publishes its survey of household inflation expectations at 3pm.

The New Zealand dollar was little changed at 92.71 Australian cents from 92.77 cents yesterday.

The kiwi touched a nine-month high of 47.68 British pence amid concerns that Britain may vote to exit the European Union in an upcoming referendum. It rose to 47.42 British pence at 8am from 46.55 pence yesterday, increased to 60.91 euro cents from 59.84 cents, and gained to 75.92 yen from 75.08 yen.

The local currency gained to 4.3747 yuan from 4.3358 yuan yesterday after Chinese authorities announced a reduction in some taxes home buyers face in many of the country's cities, in an attempt to reduce the glut of housing stock.