BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Real
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Rate
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Ratio
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Random
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Detailed explanation-1: -The real effective exchange rate (REER) is the weighted average of a country’s currency in relation to an index or basket of other major currencies. The weights are determined by comparing the relative trade balance of a country’s currency against each country within the index.
Detailed explanation-2: -An increase in REER implies that exports become more expensive and imports become cheaper; therefore, an increase indicates a loss in trade competitiveness.
Detailed explanation-3: -Is REER adjusted to inflation? Yes. REER is adjusted to inflation while calculating the REER.
Detailed explanation-4: -For these countries the real effective exchange rate index is the nominal index adjusted for relative changes in consumer prices; an increase represents an appreciation of the local currency.
Detailed explanation-5: -The real effective exchange rate (REER) compares a nation’s currency value against the weighted average of the currencies of its major trading partners. It is an indicator of the international competitiveness of a nation in comparison with its trade partners.