The New Zealand dollar gained as equity markets rallied amid hopes US policymakers will reach agreement over the US$607 billion fiscal cliff and Greece will secure the next tranche of its rescue package.
The kiwi rose to 81.84 US cents at 8am in Wellington from 81.34 cents yesterday. The trade-weighted index advanced to 73.41 from 73.09 yesterday.
Stocks on Wall Street and in Europe gained amid growing optimism US President Barack Obama will reach a deal with the House of Representatives to avert automatic spending cuts and tax hikes that would push the world's biggest economy back into recession. The Standard & Poor's 500 index rose 1.6 per cent and Germany's DAX 30 index rallied 2.5 per cent.
Investors are also hopeful European policymakers will sign off on the next aid payment for Greece, with the yield on the Mediterranean nation's 10-year bond falling 8.9 basis points to 17.2 per cent.
"Investors certainly seem hopeful we'll get done with the fiscal cliff and Greece will get its next cart of bail-out cash, and that hope is keeping equity markets perky," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "That's keeping the kiwi riding high."