PKR’s REER index decreases to 103.73 in December

January 19, 2026 (MLN): Pakistan’s real effective exchange rate (REER) decreased to 103.7329 in December 2025, up from 104.88 in November 2025, a 1.09% MoM loss and a 0.07% rise YoY from 103.66 in December 2024.

The decrease in REER indicates a relative weaking of the Pakistani rupee when adjusted for inflation against its trading partners.

Meanwhile, the nominal effective exchange rate (NEER) recorded a slight decline to 37.97 in December 2025, compared with 38.18052 in November 2025, marking a 0.54%MoM fall, and a 3% decline YoY from 39.15 in December 2024.

The Pakistani rupee closed at Rs280.1231 per USD on December 31, 2025, appreciating 0.14% MoM compared to November, but depreciating 0.56% YoY compared to Rs278.55 in December 2024.

REER is an index of the price of a basket of goods in one country relative to the price of the same basket in that country's major trading partners.

An increase in REER implies that exports become more expensive and imports become cheaper; therefore, this increase indicates a decline in trade competitiveness.

The price of each trading partner's basket is weighted by its share in imports, exports, or total foreign trade.

A REER index of 100 should not be misinterpreted as denoting the equilibrium value of the currency. 100 merely represents the value of the currency at a chosen point in time (in this case the average value of the currency in 2010).

Therefore, the movement of the REER away from 100 simply reflects changes relative to its average value in 2010 and is unrelated to its equilibrium value.

While NEER is an index of the bilateral nominal exchange rates of one country relative to its major trading partners or a selected basket of currencies.

The bilateral nominal exchange rate index with each trading partner is weighted by that country’s share in imports, exports, or total foreign trade.

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