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RBA Glossary definition for exchange rates

exchange rates – The price of one currency expressed in terms of another currency. Any exchange rate can be quoted two ways, e.g. Australian dollars per US dollar (USD/AUD) or US dollars per Australian dollar (AUD/USD). The convention for the Australian dollar is that it is quoted as the foreign currency price of the Australian dollar. This is sometimes referred to as the 'Indirect' method of quoting.

Search Results

Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials?

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1991/9108.html

Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials?

1 Sep 1991 RDP 9108
David W. R. Gruen and Jenny Wilkinson
https://www.rba.gov.au/publications/rdp/1991/9108/

Results

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
Our first conclusion is that the real exchange rate has one unit root. ... Graph 4: The Real Exchange Rate. Meese and Rogoff (1988) examine several bilateral real exchange rates with the US to determine whether there is a long run stable relationship
https://www.rba.gov.au/publications/rdp/1991/9108/results.html

References

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
Dornbusch, R. (1976), “Expectations and Exchange Rate Dynamics”, Journal of Political Economy, 84: 1161–74. ... Dornbusch, R. (1988), “Real Exchange Rates and Macroeconomics: A Selective Survey”, NBER Working Paper 2775.
https://www.rba.gov.au/publications/rdp/1991/9108/references.html

Methodology

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
Quarterly Series:. RER. log of Australia's real exchange rate with its 22 major trading partners, using quarterly average bilateral exchange rates and consumer price indices. ... Mishkin (1987) agrees with their conclusions and states even more strongly
https://www.rba.gov.au/publications/rdp/1991/9108/methodology.html

Data Appendix

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
RDP 9108: Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials? ... All exchange rates are quarterly averages. Exchange rate and CPI data has primarily been collected from the IMF's International
https://www.rba.gov.au/publications/rdp/1991/9108/data-appendix.html

Introduction

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
RDP 9108: Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials? ... Dwyer (1987) examines the relationship between these two measures of the real exchange rate.
https://www.rba.gov.au/publications/rdp/1991/9108/introduction.html

The Stylised Facts

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
Graph 1: Real Exchange Rate and Terms of Trade. Index 1984/85 = 100. ... These graphs provide some evidence that in the most recent period, relatively high Australian real interest rates have tended to keep the real exchange rate high.
https://www.rba.gov.au/publications/rdp/1991/9108/stylised-facts.html

Appendix

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
RDP 9108: Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials?
https://www.rba.gov.au/publications/rdp/1991/9108/appendix.html

Discussion and Conclusions

1 Sep 1991 RDP 9108
David W.R. Gruen and Jenny Wilkinson
increase of 1 percentage point in the differential between Australian and world long real interest rates is associated with an appreciation of the Australian real exchange rate of about 2 to ... These different roles for short interest rates presumably
https://www.rba.gov.au/publications/rdp/1991/9108/discussion-and-conclusions.html