Topic 2 - Part 2: Exchange rates

Question 1

What is an exchange rate?

Answer 1

The price of a country’s currency in terms of another country’s currency

Question 2

How are exchange rates determined in Aus?

Answer 2

Forces of supply or demand

Question 3

What rank is Aus in terms of the most traded currency?

Answer 3

5th most traded currency

Question 4

What % of currency trades is AUD used in

Answer 4

Used in 6.8% of all currency trades

Question 5

What is the significance of exchange rates?

Answer 5

Enables trade and financial flows (as firms and consumers want to be paid in their own currency) - thus, significant impacts on international competitiveness, trade flows, investment decisions, inflation, and other factors.

Question 6

What is the difference between a bilateral exchange rate and a trade weighted index

Answer 6

Bilateral exchange rate: Measures the value of a unit of domestic currency relative to another currency

Trade weighted index: Measures the movements in a nation’s currency against a basket of currencies of the nation’s trading partners, weighted according to their importance to the nations trade

This means that the TWI is a more accurate measure of the worth of the AUD

Question 7

What is the weighting of the Japanese Yen in the TWI from 2017-2022

Answer 7

10.7 (2017) –> 12.5 (2022)

Question 8

What is the weighting of the USD in the TWI from 2017-2022

Answer 8

10.3 (2017) –> 8.2 (2022)

Question 9

What is the weighting of the Chinese RMB from 2017 - 2022

Answer 9

27.46 (2017) –> 30.7 (2022)

Question 10

What is the weighting of the European Euro from 2017-2022?

Answer 10

Stagnated at around 9.7

Question 11

What is the importance of the TWI?

Answer 11

More accurate and important measure of AUD purchasing power than bilateral rates (which only measure changes against one currency, whereas the TWI measures a whole basket of currencies (that Aus is actually important to) and thus shows the overall value of the AUD). Shows upward and downward movements in the overall value. It is related to changes in Aus BOPs performance over time

Question 12

What are the limitations of the TWI?

Answer 12

Can be misleading. Weighted according to volumes of trade, regardless of which currencies the contracts are invoiced in. All the currencies are denominated in $US and so the exchange rate of US is the main factor that changes and not the currency of Aus and trading partners. ⅔ of Australian exports and ½ of imports are denominated in $US currency, reflecting that the $US/$AUD exchange rate is far more important than its weight in TWI calculation.

Question 13

When did Aus shift from a managed flexible peg to a floating exchange rate?

Answer 13

December 1983

Question 14

What is a floating exchange rate system?

Answer 14

Under this system, the exchange rate is determined by free market forces and not gov intervention. Here, supply and demand establish an equilibrium price for the AUD in terms of another country’s currency

Question 15

What are the 3 main reasons for switching to a floating ER system?

Answer 15

Most efficient exchange rate mechanism for determining value of currency

Expose the Aus economy to international competitive market pressures → ↑innovation

Pursue more independent and effective monetary policy (to control inflation) in a deregulated financial environment

Question 16

What is demand for AUD represented by?

Answer 16

Represented by the people who wish to buy the currency

Question 17

What are the 3 factors affecting demand for AUD?

Answer 17

Size of financial flows into Aus from foreign investors

Expectations of future movements of the AUD

Demand for Aus exports

Question 18

Explain how size of financial flows into Aus from foreign investors affects demand for AUD

Answer 18

This is because foreign investors wanting to invest into Aus will have to convert their currency into AUD –> increasing demand for AUD. This is further influenced by the level of Aus i/r relative to overseas i/r, where higher i/r is more attractive for foreign savings –> increased demand for AUD

Question 19

How do expectations of future movements of the AUD influence demand for AUD?

Answer 19

Speculation that the AUD will appreciate will result in increased investors wanting to invest into Aus –> increased demand for AUD due to having to change currencies.

On the flip side, expectations for a depreciation in the AUD will instead reduce demand for AUD as its deemed unprofitable

Question 20

How do demands for Aus exports influence demand for AUD?

Answer 20

This is because foreigners who buy Aus exports need to convert their currency into AUD to pay Aus exporters. This in turn is affected by changes in commodity prices and terms of trade, in which their increase will lead to the increased value of Aus exports –> increased demand for AUD

It is also influenced by the degree of international competitiveness (IC) and Aus inflation rate compared to overseas markets. If IC is high and inflation is low, Aus X will be cheaper and more attractive to foreign buyers –> increased demand for AUD

Also affected by changes in global eco conditions. Demand for Aus commodity exports is dependent on the growth rates of Aus trading partners. When global EG is ↑, then demand and prices for Aus X ↑, same vice versa

Question 21

What is supply of AUD represented by?

Answer 21

Represented by all those people who wish to sell the currency

Question 22

What is supply of AUD affected by? (5)

Answer 22

Level of financial flows

Availability of investment opportunities overseas

Speculators in the forex markets

Domestic demand for imports

Tastes and preferences of domestic consumers

Question 23

How does level of financial flows affect the supply of the AUD?

Answer 23

Financial flows out of Aus by AUs investors wanting to invest overseas will need to sell A$ –> Increasing supply for AUD

Meanwhile, if there are low financial flows out of Aus by investors trying to invest overseas, there will be less supply of AUD

Question 24

What is the level of financial flows affected by?

Answer 24

Influenced by the level of Aus i/r relative to overseas i/r. This is because investing overseas will be more worthwhile than in Aus. It is also influenced by the number of actual investment opportunities overseas there are

Question 25

How does availability of investment opportunities overseas impact supply of the AUD

Answer 25

Greater opportunities of investment → ↑ financial flows out of Aus → ↑ Supply of A$

Question 26

How does speculation in the forex markets impact supply of AUD

Answer 26

Speculators in the forex market who expect value of the A$ to go down → sell A$ → Increasing supply of A$, which ultimately contributes to the anticipated depreciation

Question 27

How does the domestic demand for imports affect supply of AUD?

Answer 27

because Aus importers who buy from overseas will sell A$ to obtain foreign currencies to make import payments.

Question 28

What is demand for imports determined by?

Answer 28

Level of domestic income. Strong EG and rising incomes and employment → Demand for imports rising → ↑Supply of A$ The domestic inflation rate and competitiveness of domestic firms that compete with imports. If Aus inflation is higher and import-competing firms are relatively uncompetitive, imports will be cheaper than domestic products → demand for imports ↑ → ↑Supply of A$

Question 29

How do tastes and preferences of domestic consumers affect supply of the AUD?

Answer 29

An increasing preference for g+s from overseas → ↑supply of A$ on the forex market

Question 30

How do RBA policy measures affect the value of the currency? (example)

Answer 30

In 2020, when RBA purchased bonds in the bond market to increase liquidity and put downward pressure on i/r, it ↑supply of A$ → 1-2% depreciation of exchange rate in Nov 2020.

Question 31

What is a depreciation?

Answer 31

a fall in the value or purchasing power of the exchange rate relative to other currencies.

Question 32

What is an appreciation?

Answer 32

a rise in the value or purchasing power of the exchange rate relative to other currencies.

Question 33

What is a summary of 6 reasons for appreciations?

Answer 33

An increase in Aus i/r or decrease in overseas interest rate Improved investment opportunities in Aus or deterioration in foreign investment opportunities A rise in commodity prices and an improvement in Aus TOT An improvement in Aus international competitiveness Lower inflation in Aus Increased demand for Aus exported g+s

Question 34

What is a summary of 6 reasons as for a depreciation?

Answer 34

A decrease in Aus i/r or increase in overseas i/r Deterioration in investment opportunities in Aus or improvement in foreign investment opportunities A fall in commodity prices and a deterioration in Australia’s TOT Deterioration in Australia’s international competitiveness Higher inflation in Australia ↑Demand for imported g+s

Question 35

What are the 3 main types of exchange rates?

Answer 35

Floating exchange rate Fixed exchange rate Managed exchanged rate

Question 36

What is a floating exchange rate?

Answer 36

This is where the exchange rate is determined by market forces. Here, there is no government intervention in the forex markets. This is considered a clean float, as there is no gov intervention.

Question 37

What are the advantages of the floating exchange rate? (3)

Answer 37

Shock absorber/automatic stabiliser. When the currency appreciates, exports become less competitive --> automatically depreciates as it is less IC, and continues in cycle. Prevents destabilising speculation on the value of the currency Due to currency being market price, it will represent the fundamental stat of the Aus economy

Question 38

What are the disadvantages of the floating exchange rate? (1)

Answer 38

There is an increased exchange rate volatility. This is because uncertainty can lead to a reduced level of investment, due to unpredictable exchange rate movements affecting the security of the investments

Question 39

What is a fixed exchange rate system?

Answer 39

It is where the exchange rate is determined by the central bank (the RBA)

Question 40

What is it called when the RBA lowers the exchange rate?

Answer 40

It is called a devaluation

Question 41

What is it called when the RBA increases the exchange rate?

Answer 41

It is called a revaluation

Question 42

What does it mean if a fixed exchange rate is pegged to another currency?

Answer 42

Meaning that there is a fixed exchange rate for its currency with a foreign currency or basket of currencies

Question 43

Did Aus peg their currency to a different currency? If so when and who

Answer 43

In 1976 with the AUD pegged to the UK

Question 44

What are the advantages of utilising a fixed exchange rate? (2)

Answer 44

Allows for certainty about the immediate ST value of the E/R which helps businesses make decisions If central bank chooses to undervalue or overvalue their E/R, it will allow for them to constantly receive the benefits respective to each

Question 45

What is an example of a fixed exchange rate and it's benefits?

Answer 45

China intentionally undervalues their currency to receive a competitive advantage to the global export market leading to no appreciation of their currency even despite the massive demand from the global economy

Question 46

What are the disadvantages of having a fixed exchange rate? (2)

Answer 46

Can cause destabilising speculation as speculators bet on the future value of the currency . If speculators buy AUD, it is harder for the central bank to keep currency at its set level. Making people want to sell more AUD. If speculators sell AUD, the central bank has to buy foreign currency to stabilise the AUD which depletes foreign reserves, making people want to buy more AUD No shock absorber unlike a floating exchange rate

Question 47

What is a managed exchange rate system?

Answer 47

Attempts to combine fixed and floating E/r systems, involving the central bank fixing the rate daily and then allowing it to float within a predetermined zone above and below the fixed rate, if it moves out of the zone, then the central bank will intervene to buy or sell currency

Question 48

What are the 3 forms of the RBA influencing the e/r? and what type are they (direct vs indirect)

Answer 48

Dirtying the float (direct) Monetary policy decisions (Indirect) Jawboning (indirect)

Question 49

What is dirtying the float as a form of influencing the exchange rate?

Answer 49

This is where the RBA feels that a ST change in the e/r will be harmful to the domestic economy (i.e. excessive speculation), and steps into the forex market as either a buyer or seller to stabilise the A$

Question 50

How does selling or buying A$ as part of dirtying the float affect the e/r?

Answer 50

To prevent a depreciation of the currency, the RBA will buy AUD, which will put upward pressure on the ER due to increased demand Selling the AUD will result in an increase in supply as opposed to less demand, which can be used to prevent rapid appreciation

Question 51

How does the RBA buying or selling the RBA influence the exchange rate?

Answer 51

This can be explained through the supply and demand curves. In which the purchase of A$ will lead to increased demand, whilst supply remains constant, thus price decreases, and vice versa

Question 52

What is the RBA's limitation to buying A$?

Answer 52

Limitation is that it depends on the size of the foreign currency holdings (reserves of foreign currency and gold that can be used to fund such purchases)

Question 53

How do monetary policy decisions affect the e/r?

Answer 53

Indirect way of influencing the ER. If the RBA wants to slow down depreciation, they may increase demand for A$ through increasing i/r --> more foreign investment Normally, this is quite unusual as the RBA only changes the i/r to influence the domestic economy and the inflation rate

Question 54

How does a depreciation result in an increase in inflation and what are the stats

Answer 54

However, RBA research shows that a 10% depreciation → 0.5% increase in inflation, and a 10% appreciation → 0.3% decline in inflation. These large currency movements are a concern for the RBA Depreciation --> more expensive to buy foreign g+s --> suppliers in Aus who buy from foreign and sell to Aus have to pass on th increased price (imported inflation) Also there is an increased demand for Aus goods and services from overseas and not enough supply --> increased inflation. Same vice versa

Question 55

What is jawboning (indirect) and how does it affect the e/r?

Answer 55

The practice where officials try to affect forex market outcomes through public statements. Predictions of strong EG can encourage foreign investment and speculation

Question 56

What is an example of jawboning?

Answer 56

Phillip Lowe during the covid pandemic stated that interest rates wont increase until 2024, which was eventually unable to be followed due to high inflation rates

Question 57

What is the general effect of an appreciation?

Answer 57

Generally contractionary effect

Question 58

What is the general effect of a depreciation?

Answer 58

Generally expansionary effect

Question 59

What are 6 negative effects of appreciation?

Answer 59

Lower IC (X more expensive) --> decreased X revenue --> Increased CAD Imports will be less expensive, encouraging import spending and worsening Australia’s CAD. Domestic production of import substitutes falls → unemployment. Reduces A$ value of returns from investments overseas, worsening NPY, as well as decreasing $A value of foreign assets. (valuation effect) Higher M spending and reduced X revenue will reduce Australia’s EG rate U/E in X and M competing industries Increase in Inflationary pressures

Question 60

What are 6 negative effects of a depreciation?

Answer 60

Increased debt servicing ratio and interest repayments, higher NPY deficit, therefore, increases Australia’s CAD Higher Inflation present as imports are expensive and therefore slows economic activity --> decreased living standards Reduced Purchasing Power A depreciation will raise the $A level of foreign debt that has been borrowed in foreign currency as expressed in AUD (valuation effect) Depreciation will raise the price of overseas assets that are being purchased by Aus investors The J curve effect

Question 61

What is the J curve effect?

Answer 61

It represents the ST and LT effects of a depreciation. Involves a curve that initially falls, then steeply rises above the starting point In the short run, a depreciation increases import prices and decreases export prices At a fixed volume, this worsens the BOGS as it decreases X revenue and increases X expenditure In the long term, it increases Export competitiveness which increases export volumes and decreases Import volume

Question 62

What are the 4 benefits of having an appreciation?

Answer 62

Increased purchasing power for consumers Lower $A value of foreign debt that has been borrowed in foreign currency. This will ↓outflow on the NPY component of the current account in future years and help reduce Aus CAD (valuation effect) Inflationary pressures will be reduced as imports become cheaper and will also reduce pressure on the RBA to raise interest rates to defend its inflation target For Aus investors wanting to purchase overseas assets, an appreciation will reduce the price of those assets

Question 63

What are the 6 benefits of having a depreciation?

Answer 63

Higher IC, therefore, ↑export income and ↑CAD in the medium term. This is due to Aus X becoming cheaper. Increasing employment A depreciation increases $A value of foreign income earned on Australia’s investment abroad, improve NPY of the CAD Imports are more expensive → discouraging import spending → improving AUstralia’s CAD. Domestic production of import substitutes will rise Greater financial inflows as domestic assets become cheaper to purchase → an increase in FDI and FPI(Foreign Portfolio investment) A depreciation also increases the value of foreign assets in Australian dollar terms (valuation effect). (Worth more than we bought them at a higher ER) (Because the investment will be considered more expensive) (Overseas assets will have appreciated in value)

Question 64

What are the effects of a depreciation of the AUD on the CA balance and why?

Answer 64

A depreciation of $A makes exports and services relatively cheaper to overseas buyers in terms of their currency. Therefore, the value of our export sales typically rises, causing the CAD to shrink. Also imports and services are dearer, and this tends to slow purchases of imports, Debits, CAD A depreciation tends to make purchase of shares and property, denominated in Australian dollars, cheaper and more attractive for investors. By increasing net capital inflow and foreign liabilities, this could ultimately add to NPY debits involving the payment of dividends, rent and profits abroad and deteriorate the CAD

Question 65

What are the effects of an appreciation of the AUD on the CA balance and why?

Answer 65

An appreciation leads to more imports than exports causing a higher CAD. Our exports become dearer, reducing value of sales, less debits and so CAD increases An appreciation can encourage capital outflow associated with the purchase of overseas assets by residents, these assets could become cheaper and more attractive if denominated in foreign currencies. in the LT, this will lead to higher NPY credits while discouraging foreign capital inflow and NPY debits. Therefore, there is a reduction in CAD

Question 66

How does the RBA overvaluing the AUD work? Using an example of the market value of 0.8 USD

Answer 66

RBA chooses to overvalue the AUD, fixing it at 0.9 USD. This means that there is an excess supply and the RBA will buy AUD and sell foreign currency to keep 1 AUD - 0.9 USD. (utilises a demand curve)

Question 67

How does the RBA undervaluing the AUD work? Using an example of the market value of 0.8 USD

Answer 67

The RBA may choose to undervalue the AUD, fixing it at 0.7 USD. This means that there is excess demand, thus the RBA will need to sell AUD and buy foreign currency to keep 1 AUD = 0.7 USD

Question 68

What are the important periods of time for Aus exchange rates, with their relevant events? (8)

Answer 68

2003-08: MIB I (Mining Investment boom) 2008-09: GFC 2010-13 MIB II (Mining Investment Boom 2) 2013-16: End of mining investment phase, enter mining production phase 2016-17 2019: 2020: 2022:

Question 69

What was the appreciation/depreciation in 2003-08: MIB I

Answer 69

Appreciation: $A rose from $US 0.47 (2001) to $0.94 peak in 2008

Question 70

What was the appreciation/depreciation in 2008-09: GFC

Answer 70

Rapid depreciation: $A fell to $US0.62 March 09 (7 year low)

Question 71

What was the appreciation/depreciation in 2010-13 MIB II?

Answer 71

$A peaked at $US 1.11 in 2011, 23% increase from US$0.87 in July 2010.

Question 72

What was the appreciation/depreciation in 2013-16: End of mining investment phase

Answer 72

Depreciation: June 2014 $0.93, $US0.73 in May 2016

Question 73

What was the appreciation/depreciation in late 2016-17

Answer 73

Appreciation: $A rose to US$ 0.80

Question 74

What was the appreciation/depreciation in 2019?

Answer 74

Depreciation: $A fell to $US 0.69

Question 75

What was the appreciation/depreciation in 2020-21: Covid

Answer 75

Appreciation: $A 0.62 in March 2020 --> $0.77 in 2021

Question 76

What was the appreciation/depreciation in 2022?

Answer 76

Depreciation: Depreciation from $0.72 in Feb 2022 → low of $0.63 in Oct 2022

Question 77

What caused the appreciation during MIB I (2003-2008) (3)

Answer 77

Demand > supply Growth in emerging economies such as China increased demand for the relatively inelastic commodities such as iron ore. This, coupld with insufficient global supply leads to higher commodity prices --> increase in demand for AUD --> appreciation of the AUD There was also increased foreign investment into Aus mining sector (where at it's peak 80% of mining sector was foreign owned) --> increased demand for AUD Increased imports of both capital goods and final g+s --> increased supply of AUD

Question 78

What were the effects of the appreciation during MIB I? (3, 1 stat)

Answer 78

Significant damage to IC of manufacture exports such as PMV and service exports such as education and tourism (Known as Dutch Disease, where growth in one industry isn’t matched in others) From 2003-2008, average growth in mining states was 4.7% compared to others which was 2.2% Appreciation led to a relative decrease in import prices which contained imported inflation

Question 79

What % of mining sector was foreign owned at its peak?

Answer 79

80% was foreign owned

Question 80

How much did investment into the mining sector increase from 2003-2012

Answer 80

2% --> 8% of GDP between 2003-2012

Question 81

What was the avg growth in mining industries from 2003-2008 compared to other industries? (example of Dutch Disease)

Answer 81

4.7% in 2003-08 compard to others which was 2.2%

Question 82

What caused the rapid depreciation during the GFC? (2)

Answer 82

There was a global eco recession --> decreased D for Aus X --> decreased D for AUD Financial outflows from Aus due to GFC caused a decline in the KFA surplus from $72.5bn to approx $40bn --> investors withdrawing funds due to uncertainty --> increased supply of AUD and Decreased demand for AUD

Question 83

How much did the GFC change the KFA surplus?

Answer 83

$72.5bn to approx $40bn

Question 84

What was the depreciation in the GFC slightly cushioned by? (2)

Answer 84

Increased IC of X --> increased demand for A --> Decreased demand for M --> small BOGS surplus RBA intervention - purchased $3.3bn of $A in forex market --> Increased demand for AUD

Question 85

What are the effects of the depression from the GFC?

Answer 85

Improved international competitiveness of Aus X and allowed for a two speed economy Aus recorded a trade surplus of 6 million in 2008, the first in over a decade Strong trade performance contained the fall in growth rate, allowing aus to avoid recession. AU growth rates dropped to 1.7% during GFC whilst global growth rates fell to negative growth (US: -8%)

Question 86

Growth rates of Aus vs the US in GFC?

Answer 86

Aus dropped to 1.7% during GFC, whilst US fell to -8%

Question 87

What should you discuss when talking about MIB I appreciation? (3)

Answer 87

Demand factors Supply factors Effects

Question 88

What should you discuss when talking about GFC depreciation? (3)

Answer 88

Both increased supply and decreased demand for the AUD What was the depreciation cushioned by? Effects of the depreciation

Question 89

What caused the appreciation during MIB II (2010-13)?

Answer 89

Increased demand for AUD

Question 90

What should you discuss when talking about the appreciation during MIB II

Answer 90

Increased demand for AUD Decreased demand for AUD in non-mining sectors (Dutch disease) Decreased supply of AUD

Question 91

What caused the rapid appreciation during MIB II (2010-2013) (2, 1 in detail (5 sub points))

Answer 91

Increased demand for AUD due to: rising world commodity prices (iron ore prices rose to $US 180/ton --> increased TOT Increased in investment in mining sectors --> KFA credits Aus considered a safe haven with AAA credit rating as opposed to Euro. I/r differential of Aus: 4.75% vs US 0% --> increased investment into Aus DECREASED supply of AUD due to low global interest rates --> decreased debt servicing repayments with decreasing NPY debits --> decreasing supply of AUD

Question 92

What did the price of iron ore rise to during MIB II?

Answer 92

Rose to $US 180/ton

Question 93

What was the Aus and US I/R differential during MIB II?

Answer 93

4.75% (AUS) vs 0% (US)

Question 94

Was there decreased demand for AUD during the MIB II? If so, explain

Answer 94

There was the 'Dutch disease', where there was a low IC in non-mining sectors --> decreased credits in BOGS from non-mining. This is seen in the closure of Holden, toyota, ford manufacturing plants due to removal of gov subsidies

Question 95

What caused the depreciation during the end of mining investment phase; start of mining production phase? (2) (2013-16)

Answer 95

Decreased demand for AUD, decreased TOT Decrease of iron ore prices from 180 USD per tonne in 2011 to 40 USD per tonne in 2016 (due to slow down in China's EG 12% --> 6% from 2010-14)

Question 96

What were the benefits of the end of mining investment phase depreciation (2013-16)? (2)

Answer 96

Depreciation improved IC of non-mining sectors --> increased demand for service exports and increased BOG credits --> increased demand for AUD US fed reserve increased official interest rates 3 times below Dec 2016-17 --> decreased investment flows into AUs --> decreased KFA credits --> decreased demand for AUD --> Decreased value of AUD --> Increased IC

Question 97

What are the two things to discuss in talking about e/r during 2013-16 (end of mining investment phase)?

Answer 97

The decreased demand for AUD Benefits of the depreciation

Question 98

How much did iron ore prices decrease from 2011 to 2016?

Answer 98

2011: 180 USD per tonne 2016: 40 USD pre tonne

Question 99

What caused the appreciation in late 2016-17? (2)

Answer 99

Increased demand for AUD due to strong commodity prices (strong growth in China), rise in iron ore and coal prices. There is also an increase in investment flows into Aus KFA surplus --> increased demand for AUD --> appreciation Decreased supply of AUD due to decreased import debits due to lower import prices --> decreased supply of AUD (?)

Question 100

What caused the depreciation in the AUD in 2019? (3)

Answer 100

Decreased demand for AUD: Global EG slowed to 3% with decreased commodities prices and a lower TOT RBA cut interest rates from 2011-16 from 4.75% to 1.50% lowering the i/r differential between Aus and overseas --> downward pressure on the AUD

Question 101

What caused the AUD appreciation in 2020/2021? (3)

Answer 101

Market sentiment; prior to covid-19, Aus already had good investability which may have led many to invest into Aus as it is perceived as a 'safe' investment Net goods and services of 19.4bn demonstrates relatively strong demand for Aus X --> increased appreciation because more people overseas have to buy AUD to purchase Aus X. This was quite a significant increase in net g+s since 2018 7.1bn, 15.4bn in 2019 8 year high iron ore price of $160/ton

Question 102

What was the net goods and services of Aus in 2020/2021 compared to the net g+s since 2018 and 2019?

Answer 102

It was $18.4bn in 2020/21, 2018: 7.1bn 2019: 15.4bn

Question 103

What caused the depreciation in 2022?

Answer 103

Deteriorating risk sentiment; meaning that investors have less of an appetite for risk --> decreased demand for AUD --> worsening depreciation

Question 104

What was the rise of the TWI during MIB I?

Answer 104

TWI rose from 50 to 75

Question 105

What period was MIB I?

Answer 105

2003-2008

Question 106

What was the TWI during the GFC?

Answer 106

TWI fell below 60

Question 107

When was the GFC?

Answer 107

2008-2009

Question 108

What was the TWI during MIB II?

Answer 108

TWI reached 87 in 2013

Question 109

When was MIB II?

Answer 109

2010-2013

Question 110

When was the end of mining investment phase?

Answer 110

2013-2016

Question 111

What was the TWI at the end of mining investment phase?

Answer 111

71.3 to 60 (Jan 2016)