Effective exchange rate indices
The exchange rate index weights together different bilateral exchange rates to create an effective (or average) exchange rate. By studying the exchange rate index, you can see how much the value of the krona has changed. A higher value in the index means that the krona has depreciated and a lower value means that the krona has appreciated. The Riksbank publishes two different exchange rate indices for the krona: with weights in terms of TCW ("total competitiveness weights”) and KIX ("krona index"). The starting date of both indices is 18 November 1992, at which point both indices were equal to 100.
The TCW index ("total competitiveness weights") is a geometric index and its weights are based on the average aggregate flows of processed goods for 21 countries. The weights take into account exports and imports, as well as third-country effects. The weights, which are produced by the IMF, are based on data from 1989-91 and have not been updated since then.
KIX ("krona index") is a geometric index, where the weights are based on total flows of processed goods and commodities for 32 countries. Like TWC, the weights take into account exports and imports, as well as third-country effects. The weights are updated each year, and are based on data with a time lag of several years.
The method used to calculate the weights was designed by the National Institute of Economic Research, which also calculated the weights up until 2015. As of 2016, the Riksbank is responsible for calculating the weights. For more information and a description of the method used to calculate the weights, see the article by Alsterlind (2006) and the National Institute of Economic Research's website in the list of links.