Bilateral Vs. Effective Exchange Rate
Bilateral exchange rate involves a currency pair, while an effective exchange rate is a weighted average of a basket of foreign currencies, and it can be viewed as an overall measure of the country's external competitiveness. A nominal effective exchange rate (NEER) is weighted with the inverse of the asymptotic trade weights. A real effective exchange rate (REER) adjusts NEER by appropriate foreign price level and deflates by the home country price level. Compared to NEER, a GDP weighted effective exchange rate might be more appropriate considering the global investment phenomenon.
Read more about this topic: Exchange Rate
Famous quotes containing the words effective, exchange and/or rate:
“Women, because of their colonial relationship to men, have to fight for their own independence. This fight for our own independence will lead to the growth and development of the revolutionary movement in this country. Only the independent woman can be truly effective in the larger revolutionary struggle.”
—Women’s Liberation Workshop, Students for a Democratic Society, Radical political/social activist organization. “Liberation of Women,” in New Left Notes (July 10, 1967)
“I cannot say what poetry is; I know that our sufferings and our concentrated joy, our states of plunging far and dark and turning to come back to the world—so that the moment of intense turning seems still and universal—all are here, in a music like the music of our time, like the hero and like the anonymous forgotten; and there is an exchange here in which our lives are met, and created.”
—Muriel Rukeyser (1913–1980)
“All of us failed to match our dreams of perfection. So I rate us on the basis of our splendid failure to do the impossible.”
—William Faulkner (1897–1962)