Kiwi drivers the New Zealand dollar experience
AbstractOn 1 August 2011 the Reserve Bank s trade-weighted exchange rate index (TWI) rose to 75. The only previous time that this level was reached since the exchange rate was floated in 1985 was in July 2007. On both of these occasions, the high level of the TWI was matched by the ANZ commodity price index, which itself reached levels not seen in 30 years. The close timing of these peaks was almost certainly no coincidence. In this paper, we quantify this relationship and consider its importance for explaining the New Zealand dollar over the past 25 years relative to the many other influences, such as housing cycles and interest rate differentials.
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Bibliographic InfoPaper provided by Reserve Bank of New Zealand in its series Reserve Bank of New Zealand Analytical Notes series with number AN2012/02.
Length: 20 p.
Date of creation: May 2012
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