An Analysis of Recent Changes in the Australian Exchange Rate: Nominal and Real

Abstract

Recent movements in the Trade Weighted Indexes (MI) of Australia's nominal and real exchange rates are documented. The volatility of the nominal rate in the pre‐float and post‐float periods is examined. Decompositions are made of the most recent depreciations of the Twls into compenents due to depreciations against the United States dollar ($US) and other major currencies. The extent to which the recent changes can be understood as necessary to correct misalignment in the Australian balance of payments is investigated. 1985 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research