PKR’s REER index increases 106.15 to in May

June 17, 2026 (MLN): Pakistan's real effective exchange rate (REER) rose to 106.15 in May 2026, compared to 105.84 in April 2026, reflecting a 0.30% MoM increase and an 8.54% YoY rise from 97.79 in May 2025.

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

Meanwhile, the nominal effective exchange rate (NEER) edged higher to 37.90 in May 2026, up from 37.89 in April 2026, recording a 0.03% MoM increase, while declining 0.64% YoY from 37.66 in May 2025.

The Pakistani rupee closed at Rs278.5019 per USD in May 2026, appreciating by 0.50% MoM compared to the April 2026 rate, and showing a 1.24% YoY appreciation against Rs282.0211 in May 2025.

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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