IDEAS home Printed from https://ideas.repec.org/a/nzb/nzbbul/june20073.html
   My bibliography  Save this article

A review of the trade weighted exchange rate index

Author

Listed:
  • Hannah Kite

    (Reserve Bank of New Zealand)

Abstract

Over the past year the Bank has completed a review of the official trade weighted index (TWI). This article documents that review, noting issues of importance when considering the most appropriate effective exchange rate for a central bank, and presenting a number of different weighting methodologies. Whilst different effective exchange rate indices are suited to different purposes, at this time we believe the current official five-currency TWI remains a good summary measure for monetary policy purposes. However, the Bank will also begin publishing an extended 14 currency TWI, which includes the currencies of a number of Asian economies with which New Zealand’s bilateral trade has increased markedly in recent years. This ‘extended’ TWI will be published on the Bank’s website as an analytical series and the properties of the series will be further monitored as trade flows develop.

Suggested Citation

  • Hannah Kite, 2007. "A review of the trade weighted exchange rate index," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 70, June.
    • Handle: RePEc:nzb:nzbbul:june2007:3
    as

    Download full text from publisher

    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2007/2007jun70-2kite.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. International Monetary Fund, 2005. "New Rates from New Weights," IMF Working Papers 2005/099, International Monetary Fund.
    2. Michael P. Leahy, 1998. "New summary measures of the foreign exchange value of the dollar," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 84(Oct), pages 811-818, October.
    3. David Hargreaves & Bruce White, 1999. "Measures of New Zealand's effective exchange rate," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 62, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Erika Arraño & Faruk Miguel, 2015. "Tipo de Cambio Real: Revisión Internacional," Economic Statistics Series 112, Central Bank of Chile.
    2. Gemma Mabin, 2010. "New Zealand's Exchange Rate Cycles: Evidence and Drivers," Treasury Working Paper Series 10/10, New Zealand Treasury.
    3. Daan Steenkamp, 2014. "Measuring New Zealand’s effective exchange rate," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 1-15, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Menzie Chinn, 2006. "A Primer on Real Effective Exchange Rates: Determinants, Overvaluation, Trade Flows and Competitive Devaluation," Open Economies Review, Springer, vol. 17(1), pages 115-143, January.
    2. Russell Barnett & Karyne B. Charbonneau & Guillaume Poulin-Bellisle, 2016. "A New Measure of the Canadian Effective Exchange Rate," Discussion Papers 16-1, Bank of Canada.
    3. Felettigh, Alberto & Giordano, Claire & Oddo, Giacomo & Romano, Valentina, 2016. "New indicators to assess price-competitiveness developments in the four largest euro-area countries and in their main trading partners," Journal of Economic and Social Measurement, IOS Press, issue 3, pages 203-235.
    4. Menzie D. Chinn, 2005. "Supply Capacity, Vertical Specialization and Tariff Rates: The Implications for Aggregate U.S. Trade Flow Equations," NBER Working Papers 11719, National Bureau of Economic Research, Inc.
    5. Daan Steenkamp, 2014. "Measuring New Zealand’s effective exchange rate," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 1-15, December.
    6. Erika Arraño & Faruk Miguel, 2015. "Tipo de Cambio Real: Revisión Internacional," Economic Statistics Series 112, Central Bank of Chile.
    7. Charles Van Marrewijk, 2004. "An Introduction to International Money and Foreign Exchange Markets," Centre for International Economic Studies Working Papers 2004-07, University of Adelaide, Centre for International Economic Studies.
    8. Roche, M.J. & Moore. M.J., 2002. "Volatile and persistent real exchange rates without the contrivance of sticky prices," Economics Department Working Paper Series n1160402, Department of Economics, National University of Ireland - Maynooth.
    9. Benjamin N. Dennis & Christopher A. Laincz & Lei Zhu, 2008. "Which Exchange Rates Matter for FDI? Evidence for Japan," Southern Economic Journal, John Wiley & Sons, vol. 75(1), pages 50-68, July.
    10. Miss Nkunde Mwase, 2012. "How much should I hold? Reserve Adequacy in Emerging Markets and Small Islands," IMF Working Papers 2012/205, International Monetary Fund.
    11. Samar Ashour & David A. Rakowski & Salil K. Sarkar, 2019. "U.S. presidential cycles and the foreign exchange market," Review of Financial Economics, John Wiley & Sons, vol. 37(4), pages 523-540, October.
    12. Sean Fahle & Jaime R. Marquez & Charles P. Thomas, 2008. "Measuring U.S. international relative prices: a WARP view of the world," International Finance Discussion Papers 917, Board of Governors of the Federal Reserve System (U.S.).
    13. Luca Antonio Ricci & Gian Maria Milesi-Ferretti & Jaewoo Lee, 2013. "Real Exchange Rates and Fundamentals: A Cross-Country Perspective," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(5), pages 845-865, August.
    14. Mayer, Thierry & Steingress, Walter, 2020. "Estimating the effect of exchange rate changes on total exports," Journal of International Money and Finance, Elsevier, vol. 106(C).
    15. Chinn, Menzie D. & Lee, Jaewoo, 2009. "Three current account balances: A "Semi-Structuralist" interpretation," Japan and the World Economy, Elsevier, vol. 21(2), pages 202-212, March.
    16. Garcia-Herrero, Alicia & Koivu, Tuuli, 2007. "Can the chinese trade surplus be reduced through exchange rate policy?," BOFIT Discussion Papers 6/2007, Bank of Finland, Institute for Economies in Transition.
    17. Tamim Bayoumi & Jaewoo Lee & Sarma Jayanthi, 2006. "New Rates from New Weights," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 1-4.
    18. Mai Dao & Ms. Ruo Chen, 2011. "The Real Exchange Rate and Employment in China," IMF Working Papers 2011/148, International Monetary Fund.
    19. Galstyan, Vahagn & Velic, Adnan, 2017. "Debt thresholds and real exchange rates: An emerging markets perspective," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 452-470.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nzb:nzbbul:june2007:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Reserve Bank of New Zealand Knowledge Centre (email available below). General contact details of provider: https://edirc.repec.org/data/rbngvnz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.