Academic journal article The Reserve Bank of New Zealand Bulletin

Editor's Note

Academic journal article The Reserve Bank of New Zealand Bulletin

Editor's Note

Article excerpt

In the September edition of the Reserve Bank Bulletin for 2010, we present a number of articles that span a range of the Reserve Bank's functions.

In our lead article, Leo Krippner explains how yield curves, which connect interest rates on debt with different maturities, can help our understanding of the economy. The paper shows how market participants' views on aspects such as inflation, output growth, monetary policy and credit risk influence the yield curves for government debt, bank securities, and mortgage interest rates. The paper then discusses yield curves for government, bank and mortgage debt before looking at how researchers have attempted to summarise yield curve information at particularly changeable periods, such as over the global financial crisis.

The second article by Enzo Cassino and Zoe Wallis from our Financial Market Research team, looks at the impact of the Global Financial Crisis on the New Zealand dollar. The article looks at three primary drivers of the exchange rate: (i) interest rate differentials, which appreciate the New Zealand dollar when New Zealand's interest rates are higher than other countries' rates; (ii) commodity prices--exporters need to convert export receipts denominated in foreign currency to New Zealand dollars in order to purchase New Zealand goods; and (iii) investors' risk appetite. …

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