The New Zealand dollar advanced on optimism a ceasefire could be agreed in Ukraine, improving the outlook for global growth and increasing the allure of riskier currencies.
The kiwi rose to rose to 83.27 US cents at 8am in Wellington from 82.94 cents at 5pm yesterday. The trade-weighted index edged up to 78.73 from 78.63 yesterday.
Investors' appetite for riskier currencies, such as the kiwi, increased after reports Russian and Ukrainian leaders had agreed on steps toward a cease-fire in eastern Ukraine, helping ease tensions that have stoked demand for safer assets. Russian president Vladimir Putin is reported to have outlined a peace plan for eastern Ukraine after agreeing with his Ukrainian counterpart Petro Poroshenko on steps toward a cease-fire in the conflict that has raged for more than five months. The two sides have planned talks in Minsk on Friday.
"Anything that has happened overnight is really do with events of a potential ceasefire originating in Ukraine," said Stuart Ive, senior dealer, foreign exchange, at OMF. "The market has taken it that if they do declare a ceasefire it's going to be good for global growth so we have seen a big swing around the US dollar with risk coming back on very quickly."
Kiwi has bounced off a solid support level of 82.85 US cents, Ive said.
