KARACHI: The State Bank of Pakistan (SBP) revised the Net Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) series using the updated trade weights and new countries, the central bank said in a press release issued on Thursday.

The SBP updated the series by using extensive dataset provided by the International Monetary Fund (IMF).

The new weights are calculated by the IMF on the basis of 2013-15 trade patterns in the global economy. For Pakistan, the update led to an increase in number of basket currencies to 37 from 25.

The new weights incorporate the changing trade dynamics of the country as the share of China and other Asian economies with Pakistan has increased considerably over the last few years.

Effective Exchange Rate is an important tool in macroeconomic analysis as it helps gauge the country’s relative position with respect to other nations in terms of trade competitiveness.

Published in Dawn, August 2nd, 2019