Measuring New Zealand’s effective exchange rate

Release date
Vol. 77. No. 6. December 2014
Daan Steenkamp
The Reserve Bank maintains a range of exchange rate indices which summarise developments in the New Zealand dollar, by aggregating various bilateral exchange rates that are relevant to New Zealand’s economy. In this article, we review some of the issues involved in doing this aggregation. From 17 December, the number of currencies in the official Trade-Weighted Index (TWI) basket has been increased to 17, and the weights on the various currencies will be calculated using shares of bilateral trade in goods and services between New Zealand and the country of each currency.