Pakistan’s Real Effective Exchange Rate (REER), which measures the value of a currency against several foreign currencies, decreased from 91.6 in July 2023 to 90.1 in August 2023, according to data released by the State Bank of Pakistan (SBP). A REER below 100 indicates that exports are competitive and imports are expensive, while an increase suggests a drop in trade competitiveness. The REER decreased by 1.61% month-on-month and by 5.3% compared to August 2022 when it stood at 95.17. The SBP clarified that an REER index of 100 does not represent the equilibrium value of the currency. On the other hand, the Nominal Effective Exchange Rate Index (NEER) decreased by 2.85% month-on-month and by 23.3% on a yearly basis. The NEER measures the value of a currency against a weighted average of several currencies. REER is an index that compares the price of a basket of goods in one country with the price in its major trading partners, while NEER measures the value of a currency against other currencies.
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