The New Zealand dollar jumped to a 13-month high of 73 US cents before tumbling to 71.75 cents as traders reacted in an illiquid market to results trickling out from the UK's referendum on whether to leave the European Union.

The kiwi dollar traded at 72.01 US cents as at 11:22am in Wellington from 71.80 cents late yesterday, and has traded in a range of 1.25 US cents since polling closed at 9am NZ time. The local currency surged as high as 50.08 British pence from 48.75 pence at 9am and was recently at 49.42 pence.

Markets are jittery watching the results, with increased confidence that Britons would vote to remain in the EU even though the most recent polls showed the outcome was too close to call and that there were enough undecided voters to swing the result either way. Among early regional results, 50.7 percent of voters in Newcastle voted to remain, which was seen by some as a slim margin, while in Sunderland, 61 percent voted to leave.

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The Guardian website currently has the leave vote ahead at 51 percent. Traders expect the outcome to be clear before the end of the trading day in New Zealand.


"Liquidity is almost non-existent and spreads are pretty wide at the moment," said Philip Borkin, senior economist at ANZ Bank New Zealand. "The market, over the past 24 hours, was pricing in a remain scenario and if any news says that's not the case, the market will react to that. Over the next few hours, this whippiness will no doubt continue."

A decisive win for the UK remaining in the EU may not drive the kiwi dollar much higher because the focus will return to the other issues that had caught the attention of financial markets, such as the timing of any further interest rate hikes by the US Federal Reserve, Borkin said.

"The kiwi is running out of oxygen at these levels no matter the result and will struggle to go much higher from here."

The Chicago Board Options Exchange's Volatility Index, known as Wall Street's 'fear gauge', fell to 17.24 overnight from 21.22 the previous day. It spiked to as high as 53.29 in August last year. Stocks rallied in both the US and Europe yesterday amid optimism the 'remain' voters will prevail.

The trade-weighted index was recently at 76.29, having earlier soared to 76.90, from 75.99 yesterday.

The kiwi rose to 63.54 euro cents from 63.41 cents and gained to 75.60 yen from 75.12 yen yesterday. The local currency climbed to 4.7366 yuan from 4.7222 yuan and rose to 95.50 Australian cents from 95.45 cents yesterday.