PKR’s REER index increases to 101.73 in September

October 20, 2025 (MLN): Pakistan’s Real Effective Exchange Rate (REER) index increased by 1.64% MoM in September 2025 to 101.73, compared to 100.01 in August 2025, data from the State Bank of Pakistan (SBP) revealed.

On a year-on-year basis, the REER appreciated by 3.13%, reflecting a gradual improvement in the external sector’s purchasing power.

However, the level above 100 indicates a mild decline in trade competitiveness, as Pakistani exports become relatively expensive while imports appear cheaper in real terms.

Meanwhile, the Nominal Effective Exchange Rate (NEER) index slightly declined by 0.21% MoM, reaching 37.77 in September 2025 from 37.84 in August 2025.

On a yearly basis, the NEER was almost flat, slipping 0.20% YoY, signaling relative stability in the nominal value of the rupee against the basket of trading partner currencies.

The US dollar to PKR parity closed the month at 281.32, showing marginal appreciation of the local currency compared to the previous month’s 281.77.

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.

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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