Pakistan’s real effective exchange rate (REER) for rupee remained slightly better in November 2021 than the currencies of Pakistan’s global trading partners, compared to October-2021.
According to a tweet published on SBP’s website yesterday, the REER index was 98.5 in November, or 96.4 in October.
A REER of less than 100 is preferred in countries such as Pakistan, where current and trade deficits have widened significantly and led to declining foreign exchange reserves.
A slight decline in the REER index will lead to lower costs for exporters, which is now required. On the other hand, the decline in the REER index will make imports more expensive. The recovery in the REER index in November kept exports competitive, but imports rose.
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