TWI question help me plZ:( (1 Viewer)

[Kangaroostyle]

Hi ppL how are ya'll doin?
I have a very important question which i dont know how to go about!

If the TWI for example is 58.1... is this good or bad?.. does it mean that 58.1 TWI cents are $1AUS?
And also how would it impact australian export and imports?...?
Can someone help me please?...!
Thank yOU!

 

[~ ReNcH ~]

Hmm...this is economics

Firstly, the TWI (Trade Weighted Index) is not a "currency" as such. There are no TWI dollars or cents. It's an index based on Australia's major trading partners and the value of the $AU compared with those countries. The greater the amount of trade Australia conducts with a particular country, the greater that country's "weighting" is towards Australia's TWI. Hence, the TWI is a reflection of the value of the Australian currency, but relative to Australia's top trading partners and not just one country alone.

A TWI of 58.1 is not necessarily good or bad. You must compare it with previous years. If it was 57 on July 17 2004 and 58 on July 17 2005, then that indicates that the value of the Australian dollar has increased against it's major trading partners' currencies. This would have a negative effect on our exports, but imports will become cheaper.

How it would impact on Australian exports and imports:
A high TWI will generally be of detriment to our exports because they become more expensive for foreign consumers to purchase, hence a decline in sales. But a high TWI will promote imports into Australia because foreign products will decline in price (In $AU terms).
The reverse is the case for a low TWI.

 

[Kangaroostyle]

Oh mY god.. now i get it.. thank u sooooOoO much RENCH.. you have been great help..

Now i can do the work knowing what i am talking about thanx again........peace!

 

[seremify007]

Don't indexes start at 100 so... that means.. over time.. it's lost a lot of value?

 

[~ ReNcH ~]

Don't indexes start at 100 so... that means.. over time.. it's lost a lot of value?

Hmm...good question.
I think it is valued according to a base year allocated 100:

The new TWI has been spliced onto the previous TWI as at 30 September 1988 to ensure continuity in the series. The base remains May 1970 = 100

http://www.abs.gov.au/Ausstats/abs@.nsf/Lookup/D4A22AD91E0348BFCA256FD3007BAF93

The figures I provided were only hypothetical, chosen to demonstrate how a fluctuation in the TWI would affect the level of trade. I'm not actually too sure what the true TWI is though.

Edit: The TWI as of 4pm on July 22 was 64.6