Pakistan’s export cheaper as Real Effective Exchange Rate down 1.34%

The Real Effective Exchange Rate (REER) Index witnessed a 1.34 percent drop in November when compared with October, says the State Bank of Pakistan (SBP).

According to the latest monthly data released by the SBP on Wednesday, the REER Index was recorded at 98.84 in November against 100.18 in October.

However, the index was up 0.24 percent on year-on-year basis when compared the value of 98.60 in November 2021.

REER is a measure of the value of a currency against a weighted average of several foreign currencies. A decrease in REER implies that exports have become cheaper while imports become more expensive. Thus, this latest fall indicates an increase in trade competitiveness.

Meanwhile, the Nominal Effective Exchange Rate (NEER) Index declined by 2.5 percent on month-on-month basis in November to a provisional value of 47.74 from 48.74 in October 2022.

On the yearly basis, the NEER Index showed a drop of 13.73 percent against the value of 55.35 in November 2021.

NEER is an unadjusted weighted average rate at which one country’s currency exchanges for a basket of multiple foreign currencies. The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency.

In economics, it is an indicator of a country’s international competitiveness in terms of the foreign exchange (forex) market. Forex traders sometimes refer to the NEER as the trade-weighted currency index.


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