Twi (1 Viewer)

[wildtiger]

I'm using Dixon's book, and on page 104 there is a table showing the TWI over the years.

What does a 58.4 TWI in 2002-03 mean? What units are they in? This number holds no meaning for me =/

This is compared to:
2000-01 : 49.7
2001-02: 52.3

 

[tWiStEdD]

The TWI is a more effective and accurate measurement of the value of a currency. The TWI gives our dollar a value given the volume of SS and DD for $A and moderated by the weighting each country is given.
You know that SS and DD inside Australia is infinite and constant respectively. However, in the global market economies we export to and economies we import from generate DD for $A given that we will ask to be paid in $A. With this in mind, The trade weighted index allocates weightings to countries depending on how involved they are in trade with us.
I will give you a better explaination later.

 

[smell]

twi is the trade weighted index

it measures the value of our currency in terms of a basket of other currencies according to their significance as trading partners including us$, Pound, yen, euro.

 

[riVa0o]

i thought the numbers on the TWI were an index.. so that probably means they have a 'base' year which would be given "100" and the subsequent years would be compared to this base year... so in other words if the 'base year' was 100, and the year you have is around 50, then the value of the $A has fallen against these other currencies by abt 50% since that base year...
well the examples probably wrong, but thats the general idea i think...

 

[aNg3L_iReNe]

2003 exam for economics

(i) Briefly explain why the exchange rate can move in opposite directions to the twi ?

 

[skypryn]

lol nobody really answered wildtiger's question...well kinda. the untis are an index compared to a base year of 100. this could be compared to other indexes such as the CPI.

irene - exchange rate against one country could be improving, but we could have little trade dependance on this country. against major trading partners the exchange could be depreciating and hence a lower TWI.