Q. The terms “REER & NEER” is often seen in news is related to?

[A] Exchange rate

[B] External aid

[C] External borrowings

[D] Foreign trade agreements

Answer: A

Explanation: The Nominal Effective Exchange Rate (NEER) of the rupee is a weighted average of exchange rates before the currencies of India’s major trading partners.

  • When the weight of inflation is adjusted with the NEER, we get the Real Effective Exchange Rate (REER) of the rupee.
  • Since inflation has been on the higher side in recent months, the REER of the rupee has been more against it than the NEER.

Source: Ramesh Singh