We see this most recently in Japan and the US, where the Nikkei and S&P indexes have increased by 40 percent and 16 percent respectively since the end of 2012. A close relationship exists between the New Zealand dollar and international risk assets such as equities.
A rise in the S&P 500 often reflects a broader ‘risk on’ trading environment that leads to higher exchange rates in the currencies of better performing advanced economies such as New Zealand, Australia, Norway, Sweden, and some emerging market economies.