Pakistan’s Real Effective Exchange Rate (REER) index fell to 96.6 in June 2025, down from 97.8 in May 2025, according to data released by the State Bank of Pakistan (SBP). This signals a slight depreciation of the rupee on a trade-weighted basis.
What is REER?
The REER is an important economic indicator that measures the value of a country’s currency against a basket of other major currencies, adjusted for inflation. It helps assess the competitiveness of a country’s exports.
• A REER above 100 means the currency is overvalued, which can make exports more expensive and less competitive.
• A REER below 100 means the currency is undervalued, which can help boost exports by making them cheaper in global markets.
With the index at 96.6, Pakistan’s currency is currently undervalued, which may support export growth by making Pakistani goods and services more affordable for foreign buyers.
What this means?
The decline in REER reflects a mix of factors, including:
• The depreciation of the rupee against trading partner currencies,
• Relative inflation differences between Pakistan and its key trading partners.
A lower REER is generally seen as positive for exports, but it can also increase the cost of imported goods, potentially adding to inflationary pressure.
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