Real effective exchange rate

The Real Effective Exchange Rate (REER) measures a country's currency value compared to a weighted basket of other currencies, adjusted for inflation differences. It indicates whether a country's goods and services are becoming more or less competitive internationally. A rising REER suggests the currency is strengthening, potentially making exports more expensive and imports cheaper, which can affect trade balances. Conversely, a falling REER indicates a weaker currency, possibly boosting exports. It provides a comprehensive view of currency strength by considering multiple trading partners and inflation, helping policymakers, businesses, and investors assess competitiveness over time.