What is real effective exchange rate (REER)?
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It is the weighted average of a country’s currency in relation to an index or basket of other major currencies.
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The weights are determined by comparing the relative trade balance of a country’s currency against that of each country in the index.
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An increase in a nation’s REER is an indication that its exports are becoming more expensive and its imports are becoming cheaper. It is losing its trade competitiveness.
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