quick question!!! (1 Viewer)

[yabby]

What does an increase in the TWI (trade weighted Index) mean for aussie goods?

What does a decrease in our terms of trade mean for aussie goods?

 

[kouklitsa]

TWI is just an exchange rate... so like any appreciation, it would make imports cheaper but exports more expensive.. ie less internationally competitive

now terms of trade is about PRICES... so if our TOT decreased then import prices are rising relative to export prices... so it doesnt exactly affect our exports... but for us it takes a larger volume of exports to be able to finance the same amount of imports ... do i make sense? i feel like im going round in circles lol

 

[sunjet]

TWI - average value of our currency to 90% of our trading partners, thus if depreciation our exports more competitive and vice-versa.

decrease in TOT means the same amount of exports can buy less imports thus leading to higher CAD.