Admin Reporter- POOJA1

Jan 24 2021

‘Rupee’s real value stable, showing better external competitiveness’: RBI study

Sunday, 24 January 2021

Given the fact that the global trade environment is undergoing a shift, it is important that the nominal effective exchange rate (NEER) and real effective exchange rate (REER) basket of the rupee is reviewed regularly, the RBI paper said. In the case of India, the relative importance of trading partners has shifted mainly towards emerging markets and developing economies (EMDEs) since 2004-05. The NEER is an index of the weighted average of bilateral exchange rates of home currency vis-a-vis currencies of trading partners, with weights derived from their shares in the trade basket of the home currency. A REER is the NEER adjusted by relative prices or costs, typically captured in inflation differentials between the home economy and trading partners.

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