PKR’s Real Effective Exchange Rate Index decreases by 2.32 percent in June

Jul 23, 2021 (MLN): Pak Rupee's Real Effective Exchange Rate Index (REER) decreased by 2.32 percent in June 2021 to a provisional value of 99.85 from the revised value of 102.22 in May 2021.

According to data published by the State Bank of Pakistan (SBP), the REER index has increased by 7.32 percent compared to June 2020.

Similarly, the Nominal Effective Exchange rate Index (NEER) decreased by 1.99 percent in June to a provisional value of 60.02 from the revised value of 61.24 in May. On a yearly basis, the NEER Index has increased by 0.42 percent.

PKR closed June at 157.5437 against the USD showing a depreciation of 2.00 percent compared to its value in May 2021. However, Compared to June 2020, PKR has appreciated by 6.67 percent.

In his opening comments on the interbank market, Asad Rizvi, CEO of CMKA, said, “Though a good part of the payment has been remitted, but we are probably still not done with the settlement. However, my target of Rs 162 per $ is met.”

He indicated that the rupee will soon make a correction. He suggested the market should avail of this opportunity. As the REER index clocked below 100, it supports rupee correction, he noted.

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 therefore, this decrease indicates an increase in trade competitiveness.

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