Reserve Bank of New Zealand Bulletin articles
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September 2007 (Vol. 70, no 3)
Download the complete issue of the September 2007 Bulletin (PDF 1MB)
Articles
Editor’s Note (PDF 140KB)
A profile of the NZ dollar foreign exchange market (PDF 257KB)
In this article we review developments in the NZD/USD market between January 2001 and March 2006 using a new and detailed dataset from Reuters. Given the traditionally opaque nature of the global FX market, the dataset provides some insights into the NZD/USD market that have previously been unavailable. We show that trading volumes and other measures of market activity, like the depth of the limit order book, have increased significantly since 2001. We also show that market activity changes at different times of the trading day, with considerably more trading volumes taking place in London and New York.
Price changes by firms in New Zealand - some evidence from the Quarterly Survey of Business Opinion (PDF 637KB)
In the last decade, central banks have conducted new research enhancing their understanding of firm-level price-setting behaviour. This work has revealed new information about the frequency with which firms change prices and provided explanations as to why prices are sticky. This information could potentially improve monetary policymaking and, as a result, reduce the real costs of policy changes and non-policy shocks. This article outlines the major themes and results from selected international research. It then examines price changing behaviour in New Zealand using firm-level data from the Quarterly Survey of Business Opinion (QSBO) published by the New Zealand Institute of Economic Research (NZIER). In line with international research, we find considerable diversity in the frequency of price changes by firms. Moreover, firms change prices more in response to cost changes than demand changes, and more in response to falling demand than increasing demand.
Payments and the concept of legal tender (PDF 582KB)
This article briefly looks at the concept of legal tender, drawing on the experience of New Zealand’s recent change-over to new, lighter coins. Legal tender is a tender of payment that, by law, cannot effectively be refused in settlement of a debt denominated in the same currency. Although the basis for most cash transactions is generally taken for granted, the article notes that without the concept of legal tender, cash transactions could not always take place with sufficient certainty to satisfy the needs of consumers and sellers.
The views expressed are those of individual authors and do not necessarily reflect official positions of the Reserve Bank of New Zealand. Articles published in this Bulletin may not be wholly or substantially reproduced without the permission of the Reserve Bank of New Zealand. Data, brief extracts from articles, and other material appearing in the Bulletin, may be used without restriction provided due acknowledgement is made of the source.
