Rupee keeps on sliding: Why should we bother about REER and NEER?

With the rupee dropping to new lows against the dollar every day, Anup Roy explains two terms - NEER and REER - that have become part of our daily conversation

Why should we bother about ‘REER’ and ‘NEER’?

The nominal effective exchange rate or NEER is an index of the weighted average of the exchange rates of a basket or group of countries. The US dollar versus Indian rupee numbers quoted regularly reflect the value of the rupee against the US dollar, and not against other currencies with which India has significant trading links. Over a period of time, the other currencies might also have depreciated against the dollar, with the result that the relative value of the rupee is very different against these currencies. The NEER seeks to resolve