Exchange-rate movements: the market for the NZ$ (every paper)

Exports create DEMAND for NZD (foreign buyers need it to pay); imports create SUPPLY of NZD (NZ buyers sell it for foreign currency). Cause → currency direction → export/import chain → winners and losers.

Reading the foreign-exchange graph

The vertical axis is the exchange rate (Er), in foreign currency per NZ$; the horizontal axis is the quantity of NZ$ traded.
More NZ EXPORTS → foreign buyers need more NZD to pay for them → demand for NZD shifts RIGHT → Er rises (NZD appreciates).
More NZ IMPORTS → NZ buyers supply more NZD to buy foreign currency → supply of NZD shifts RIGHT → Er falls (NZD depreciates).

Exam-style RBNZ raises interest rates while others do not Effect on the NZD and on an apple exporter. Higher NZ rates attract overseas depositors → NZD demand ↑ → NZD APPRECIATES. Apples in yen now cost Japanese buyers more → volumes fall. Exporter revenue falls (or margins are cut to hold the yen price). ✓ Appreciation; exporter worse off. Add the import side (cheaper inputs) for balance. ℹ

Chain discipline

Marks sit in the LINKS, not the endpoints. "NZD rises so exporters suffer" scores little; the four-arrow version scores fully.

Cause	NZD direction
More exports	Appreciates (demand for NZD rises)
More imports	Depreciates (supply of NZD rises)
Higher NZ interest rates	Appreciates (overseas deposits attracted)
Tourism boom to NZ	Appreciates (tourists buy NZD)

Practice for this standard covers the whole topic — flashcards and quiz.