The value of the Swedish currency has became the best indicator on how the global stock market is developing, research shows.

The Japanese yen and the Swedish krona have become the best currency pair in telling what’s happening on the stock market, Reuters reports. As the value of the currency is determined by the investor’s risk appetite there’s an apparent correlation to other markets.

Up till recently, the correlation between the yen and the Australian dollar was the sharpest needle to point out stock market changes. But the SEK/JPY relationship has succeeded the title of being the the most sensitive to equity markets, according to foreign exchange researchers at Barclays Capital.

When investors get nervous they tend to move into more stable currencies, such as the Japanese yen that is supported by the county’s current account surplus. When the investors feel confident, they turn too less safe currencies with higher yield.

Over the last 52 trading days SEK/JPY has had a "beta" of 1 against MSCI world stocks, meaning that when the stock market rise 1 percent the krona also rise 1 percent against the yen.

The researchers at Barclays were surprised by their findings, Reuters reports.

However, the global financial services company ING believes the correlation might be based on equity portfolio flows rather than currency trading, particularly the flow between cyclical stocks and defensive sectors.

"SEK tends to have one of the most stable and positive correlations against this ratio, while the JPY has the most stable and negative," ING said in a note.

"On the assumption that the (U.S. Federal Reserve) is not going to hike rates early and force portfolio managers back to defensive strategies, it looks like SEK/JPY can continue to appreciate".