BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Real Earning Emergent Ratio
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Real Elective Effective Ratio
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Real Effective Exchange Rate
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Role Effective Earned Rate
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Detailed explanation-1: -What is real effective exchange rate (REER)? REER is the real effective exchange rate (a measure of the value of a currency against a weighted average of several foreign currencies ) divided by a price deflator or index of costs.
Detailed explanation-2: -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-3: -The real exchange rate (RER) between two currencies is the nominal exchange rate (e) multiplied by the ratio of prices between the two countries, P/P*.
Detailed explanation-4: -(ii) REER is an effective exchange rate based on real exchange rates instead of nominal rates. (iii) Real Exchange Rate (RER) is the exchange rate that is based on constant prices to eliminate the effect of price changes.
Detailed explanation-5: -The real exchange rate (RER) between two currencies is the product of the nominal exchange rate (the dollar cost of a euro, for example) and the ratio of prices between the two countries.