June 28, 2022 (MLN): The Real Effective Exchange Rate (REER) index was recorded at 93.57 in May 2022, showing a drop of 2.40% compared to 95.87 in April 2022, the latest monthly data published by the State Bank of Pakistan (SBP) showed on Tuesday.
On a year-on-year basis, the index fell by 6.22% against the value of 102.21 in May 2021.
It is pertinent to mention that the REER moved down by 9.11% from its peak of 102.95 in April 2021
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 fall indicates an increase in trade competitiveness.
Meanwhile, the Nominal Effective Exchange rate Index (NEER) decreased by 2.41% in May 2022 to a provisional value of 52.11 from the revised value of 53.40 in April 2022. On a yearly basis, the NEER index witnessed a drop of 14.9% from the value of 61.24 in May 2021.
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