Exchange Rate Dynamics: Deciphering REER & NEER
Since April-end 2014, the Indian rupee has experienced a depreciation of 27.6% against the US dollar, with its exchange rate dropping from Rs 60.34 to Rs 83.38. This depreciation rate is slightly higher than the 26.5% observed from April-end 2004 to April-end 2014, during which the rupee declined from Rs 44.37 to Rs 60.34 against the dollar. NEER stands for Nominal Effective Exchange Rate, which measures the value of a country's currency against a weighted average of other currencies. It reflects changes in exchange rates based on actual market exchange rates. REER, or Real Effective Exchange Rate, adjusts the NEER for inflation differences between countries. It provides a more accurate assessment of a country's currency value by considering changes in purchasing power. Continue Reading- REER & NEER