Pakistan’s Real Effective Exchange Rate (REER), a key indicator measuring the value of the rupee against a trade-weighted basket of multiple foreign currencies, rose to 100.86 in October 2024 from a revised value of 98.64 in September 2024, according to data released by the State Bank of Pakistan (SBP) on Monday.
This marks a 2.25% month-on-month increase.
A REER value above 100 indicates that the country’s exports become less competitive internationally while imports become cheaper.
Conversely, a REER below 100 reflects greater export competitiveness. Comparatively, the REER in October 2023 stood at 98.52, indicating a year-on-year increase of 2.4%.
The SBP has clarified that a REER value of 100 does not necessarily signify the currency’s equilibrium.
“Movement of the REER away from 100 simply reflects changes relative to its average value in 2010 and is unrelated to its equilibrium value,” the central bank explained in a note.
In addition to the REER data, the SBP reported that the Nominal Effective Exchange Rate (NEER) increased by 1.13% month-on-month in October 2024, rising to a provisional value of 38.27 compared to 37.84 (revised) in September 2024.
However, on an annual basis, the NEER index declined by 2.3%, down from 39.17 in October 2023.
