GalaTime

I’ve written about the Real Effective Exchange Rate (REER) before, in the context of fair value for the Indian rupee. The Reserve Bank of India (RBI) provides detailed statistics on the nominal & real exchange rates, dating back to 1991. In November 2005, the RBI replaced its 5-country REER/NEER index with a 6-currency index. It also updated its 36-country index - “for better representation of countries which have a significant share in India’s foreign trade“.

To understand how the RBI uses REER to manage the exchange rate, as well as how under/over-valuation of the rupee is determined, I suggest a review of these articles:

- “Let’s appreciate the appreciating REER“, Swaminomics.org, October 2005. 

- “Reviewing the Indian rupee’s performance”, Standard Chartered Bank - Economic Update, June 2005.

- “Cause & FX“, Merrill Lynch, October 2004.

- ”The Indian Rupee – Cheapest Currency in the World?“, Oxus Fund Management, September 2000.

Of course, this is all based upon faith in the REER methodology, to begin with!

This entry was posted on Tuesday, February 14th, 2006 at 2:55 pm and is filed under exchange-rates. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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