Pakistan’s Real Effective Exchange Rate (REER), which measures the country’s currency value against a weighted basket of foreign currencies, fell to 102.54 in February 2026 from 103.30 in January, according to data released Monday by the State Bank of Pakistan (SBP).
A REER reading above 100 indicates relatively uncompetitive exports and cheaper imports, while a value below 100 signals the opposite. The index decreased 0.74% month-on-month (MoM) in February 2026, though it remained slightly higher than February 2025, when the revised REER stood at 102.25, marking a 0.3% year-on-year increase.
Meanwhile, the Nominal Effective Exchange Rate Index (NEER), which reflects the unadjusted value of the rupee against trading partner currencies, declined 0.50% MoM to 37.64 in February from 37.83 in January. On an annual basis, NEER fell 3.7% compared to February 2025, when it was 39.09.
The SBP clarified that a REER reading of 100 does not correspond to the currency’s equilibrium value. Movements away from 100 reflect changes relative to the average value in 2010 and are unrelated to equilibrium levels, the central bank noted.
REER is calculated by comparing the price of a basket of goods in Pakistan with similar baskets in its major trading partners. Prices are converted into a common currency using nominal exchange rates and weighted according to each partner’s share in Pakistan’s trade.
This decline in REER suggests a modest improvement in Pakistan’s export competitiveness, even as the rupee remains influenced by global currency movements and trade-weighted pressures.
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