September 2007 Reserve Bank Bulletin released
The Reserve Bank today released the September 2007 issue of the Reserve Bank of New Zealand Bulletin.
Over recent years, a range of indicators and much anecdotal evidence has pointed to a significant increase in trading activity in the New Zealand dollar. The first article looks at trends in New Zealand's foreign exchange market for the period from 2001 to 2006. The article reveals a significant increase in trading volumes and a general increase in liquidity within the New Zealand dollar market. Two case studies in the article demonstrate the speed with which the foreign exchange market is able to absorb and reflect new information in pricing as it comes to hand.
The second article looks at New Zealand's firms pricing behaviour - the way firms alter their prices - and the driving factors behind those decisions. It presents some preliminary evidence gleaned from the New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion. These results suggest that New Zealand firms tend to adjust prices more in response to cost changes than demand changes and prices appear to respond more in the face of negative demand changes than positive demand changes.
The final article briefly explores the concept of legal tender. The article explains and offers practical examples showing that without the safeguard of legal tender, cash transactions could not always take place with sufficient certainty to satisfy the needs of consumers and sellers.
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