Australia and New Zealand benefit from the Closer Economic Relations agreement (1983) which provides New Zealand with better opportunities for its dairy trade—its biggest export—in Australia, and for New Zealand to abolish quantitative restrictions and export incentives. By 1990 the two countries could trade without restriction and without tariffs. In early March 2011, the AUD/NZD reached its pinnacle at 1.3671 ‘Aussie’ Dollars. The ‘Aussie’ to ‘Kiwi’ exchange rate reached its lowest point during the economic crisis in October 2008, falling to 1.1122. This slump was most likely due to fears associated with owning commodity assets at a time when the economic stability of nations was rupturing.
In 2014 the New Zealand Dollar began to hold its own against its Australian cousin as the Reserve Bank of New Zealand became the first developed nation central bank to introduce a cycle of interest rate increases. The Australian Dollar also began to be adversely affected by a tapering in the domestic mining boom, slowing growth in the US and mixed fundamentals from China – Australia’s main trading partner. However, the AUD/NZD exchange rate was also being supported by falling dairy prices (New Zealand’s main export) and a risk-off attitude inspired by geopolitical tensions.