If the AUD appreciates by 5% against the US dollar and depreciates by 5% against the Japanese yen, then the trade- weighted index (TWI) of the AUD will rise by 10%.

Question

Quizplus · Accepted Answer

The trade-weighted index (TWI) measures the value of a currency against a basket of other currencies, not just one. A 5% appreciation against the USD and a 5% depreciation against the JPY does not necessarily result in a 10% rise in the TWI, as it depends on the weights and movements of all currencies in the basket.

If the AUD Appreciates by 5% Against the US Dollar