Nominal Effective Exchange Rate (NEER)
The Nominal Effective Exchange Rate (NEER) is a measure of a country’s currency relative to a basket of foreign currencies. It is used to assess the strength of a currency and its impact on the country’s economy. The NEER is calculated by taking the weighted average of a country’s exchange rate against a basket of foreign currencies. The weights are based on the relative importance of each currency in the country’s trade. The NEER is an important indicator of a country’s economic health and can be used to assess the impact of exchange rate movements on the country’s economy.
History of the Term
The concept of the Nominal Effective Exchange Rate (NEER) was first developed in the late 1960s by economists at the International Monetary Fund (IMF). The NEER was initially used to measure the relative strength of a country’s currency against a basket of foreign currencies. It was later adopted by central banks and other financial institutions as a tool to assess the impact of exchange rate movements on the country’s economy. The NEER has since become an important indicator of a country’s economic health and is used by central banks and other financial institutions to assess the impact of exchange rate movements on the country’s economy.
Comparison Table
| Country | NEER |
|---|---|
| United States | 97.5 |
| Japan | 105.2 |
| Germany | 99.3 |
| United Kingdom | 95.7 |
| France | 97.2 |
Summary
The Nominal Effective Exchange Rate (NEER) is an important indicator of a country’s economic health and is used to assess the impact of exchange rate movements on the country’s economy. The NEER is calculated by taking the weighted average of a country’s exchange rate against a basket of foreign currencies. The weights are based on the relative importance of each currency in the country’s trade. For more information about the NEER, you can visit the websites of the International Monetary Fund (IMF) and the World Bank.
See Also
- Real Effective Exchange Rate (REER)
- Exchange Rate Regime
- Currency Appreciation
- Currency Depreciation
- Balance of Payments
- Foreign Exchange Market
- Currency Swap
- Currency Intervention
- Currency Risk
- Currency Hedging
