Media Release Trade-weighted Index

The Bank has revised the weights used for currencies in the trade-weighted index (TWI) for the Australian dollar. The revisions, which take effect from 1 October 1997, allow for changes in the country mix of Australia's trade during 1996/97.

The TWI is based on a sufficient number of currencies of our trading partners to give at least 90 per cent coverage of Australia's two-way merchandise trade. Based on 1996/97 trade figures, this requires trade-weights for 26 countries, with the United Arab Emirates dirham being added to the basket of currencies. The weights are shown in the attached table.

Trends in the weights evident over the past few years have continued. The share of Australia's largest trading partner, Japan, declined further, accounting for 18 per cent of the index, down from 20 per cent a year ago and 23 percent two years ago. In contrast, trade between Australia and other countries in the Asian region has continued to rise in importance, accounting for 43 per cent of the index, up from 42 per cent a year ago and 40 per cent two years ago.

The method used to calculate the trade-weighted index was described in the Reserve Bank Bulletin for October 1988.

The new weights are listed below; the previous weights are shown in brackets.