October 26, 2021 (MLN): Pak Rupee's Real Effective Exchange Rate Index (REER) fell to a provisional value of 95.86 in September 2021, showing a depreciation of 0.71% when compared to the revised value of 96.54 in August 2021.
According to data published by the State Bank of Pakistan (SBP), the REER index increased by 1.85% compared to September 2020.
Cumulatively, REER depreciated by 4% since the beginning of FY22 and by around 7% from its recent peak of 103 in April 2021.
Likewise, the Nominal Effective Exchange rate Index (NEER) decreased by 2.57% in September 2021 to a provisional value of 56.32 from the revised value of 57.81 in August 2021.
On a yearly basis, the NEER index dropped by 3.18% against the value of 58.17 recorded in September 2020.
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.
