Welcome, Guest. Please login or register.

May 25, 2019, 03:04:01 am

Author Topic: Trade Weighted Index  (Read 261 times)  Share 

0 Members and 1 Guest are viewing this topic.

Elayg6

  • Forum Regular
  • **
  • Posts: 66
  • Respect: 0
Trade Weighted Index
« on: October 27, 2018, 05:20:54 pm »
0
Can someone explain the concept of TWI and what influences it?

S200

  • Part of the furniture
  • *****
  • Posts: 1086
  • Yeah well that happened...
  • Respect: +236
Re: Trade Weighted Index
« Reply #1 on: October 27, 2018, 05:31:46 pm »
0
The TWI is the AUD weighted against a group of other currencies (Primarily our major trading partners)...

It is influenced by the macroeconomic factors in the Australian economy, (the things affecting AD/AS) as well as the state of the economy among our trading partners.
Someone plz confirm this. I suck at Eco...
Carpe Cerevisi

\(\LaTeX\) - \(e^{\pi i }\)
#ThanksRui! - #Rui\(^2\) - #Jamon10000

Chelsea f.c.

  • Trendsetter
  • **
  • Posts: 116
  • Respect: 0
Re: Trade Weighted Index
« Reply #2 on: October 27, 2018, 10:15:08 pm »
+1
To add to this if twi is appreciating then that means 1 AUD buys more currencies of our trade partners e.g. A high dollar means I can sell more coal to china at a higher price or buy more phones from china at a lower price... where as expected china has greatest weight in twi
Bachelor of Commerce (Honours) Finance - UoM - 2019
Bachelor of Commerce - Economics and Finance - UoM - 2015 - 2018
Diploma in Mathematical Sciences - Statistics and Stochastic Processes - UoM - 2015 - 2018

S200

  • Part of the furniture
  • *****
  • Posts: 1086
  • Yeah well that happened...
  • Respect: +236
Re: Trade Weighted Index
« Reply #3 on: October 27, 2018, 10:17:12 pm »
0
Yeah. I'd also focus more on what the changed to our TWI rate means for our economy rather than what can cause our TWI rate to change.
Carpe Cerevisi

\(\LaTeX\) - \(e^{\pi i }\)
#ThanksRui! - #Rui\(^2\) - #Jamon10000

Chelsea f.c.

  • Trendsetter
  • **
  • Posts: 116
  • Respect: 0
Re: Trade Weighted Index
« Reply #4 on: October 27, 2018, 10:30:15 pm »
0
A twi is actually more accurate as the strength of aud against other currencies relates to the strength of it's economy (You need aud to invest or buy goods from australia)... however if you looked at aud/USD over previous five years you may say Australia is doing bad but it's probably just us going gangbusters where the twi more accurately reflects position of country where it is weighted against a basket of major trade partners e.g. us China Japan great Britain and europe
Bachelor of Commerce (Honours) Finance - UoM - 2019
Bachelor of Commerce - Economics and Finance - UoM - 2015 - 2018
Diploma in Mathematical Sciences - Statistics and Stochastic Processes - UoM - 2015 - 2018

DoctorTwo

  • Trendsetter
  • **
  • Posts: 109
  • Respect: +6
Re: Trade Weighted Index
« Reply #5 on: October 27, 2018, 11:22:07 pm »
+1
Probably won't need to know this but the currencies that are included are here: https://www.rba.gov.au/statistics/frequency/twi/twi-20171130.html, it popped up on multiple choice in one of my SACs and I wouldn't count on VCAA being nice so I'd remember at least what the top 3 are. Also, this has probably been said already but the TWI is affected pretty much only by demand and supply, which is pretty much the terms of trade in this case. When Australians import goods and services, we need to convert our currency to the currency of the seller, which increases the supply of AUD on the foreign exchange and therefore depreciates the dollar. When Australians export goods and services, foreign buyers need to convert their currency into AUD which increases demand for it and appreciates the dollar. When imports or exports slow, the opposite effects will happen.