BANKING AFFAIRS

Detailed explanation-1: -The nominal effective exchange rate (NEER) is an unadjusted weighted average rate at which one country’s currency exchanges for a basket of multiple foreign currencies. The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency.

Detailed explanation-2: -The nominal effective exchange rate (NEER) of the euro is a weighted average of nominal bilateral rates between the euro and a basket of foreign currencies. It is an indicator of the external values of the euro vis-à-vis the currencies of selected euro area’s trading partners.

Detailed explanation-3: -NEER is the average rate at which one nation’s currency is valued in comparison with a basket of other currencies, weighted for the percentage of trade that each currency represents to that nation. The NEER can be adjusted to compensate for the inflation rate in the home country. That adjusted number is the REER.

Detailed explanation-4: -An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee. 2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.

Detailed explanation-5: -A spot exchange rate is the current price at which a person could exchange one currency for another, for delivery on the earliest possible value date.