Pakistan’s Real Effective Exchange Rate (REER) continued its upward trend, reaching 104.76 in November 2025, according to data released by the State Bank of Pakistan (SBP) 📊. This marks an increase from a revised 103.92 in October 2025, indicating a further appreciation in the currency’s real effective value.
⚠️ Why REER Above 100 Matters
A REER reading above 100 signals that:
- 📦 Exports become less competitive
- 🛒 Imports turn relatively cheaper
Conversely, when the REER falls below 100, exports gain competitiveness while imports become more expensive.
In November 2025, Pakistan’s REER increased by nearly 0.8% month-on-month (MoM) 📈.
📅 Year-on-Year Comparison
Compared to November 2024, when the REER stood at 103.02, the index has risen by 1.7%, highlighting a steady upward drift in real terms over the past year ⏳.
🧠 Market Perspective
According to Topline Securities:
“Pakistan’s REER has increased to 104.76 in November 2025, higher than the 10-year average of 103.2.”
The brokerage added that:
“A rising REER suggests that the relative value of the home currency is becoming overvalued compared to peer countries.”
This trend can place additional pressure on exports at a time when external balance remains a key concern ⚖️.
🏦 SBP Clarifies the REER Benchmark
The SBP cautioned against misinterpreting the 100 mark on the REER index 🚨.
According to the central bank:
“Movement of the REER away from 100 simply reflects changes relative to its average value in 2010 and is unrelated to its equilibrium value.”
In other words, a REER above 100 does not automatically mean the currency is fundamentally misaligned.
🔁 NEER Also Moves Up MoM
Alongside REER, the Nominal Effective Exchange Rate (NEER) also saw an increase:
- 📈 NEER rose by 0.49% MoM in November 2025
- Reaching a provisional value of 38.18, up from 38.00 in October
However, on a year-on-year basis, the NEER declined by 1.8% from 38.89 in November 2024.
❓ What Exactly Is REER?
According to the State Bank of Pakistan, REER represents:
🧺 “The price of a basket of goods in one country relative to the price of the same basket in its major trading partners.”
Key points:
- Prices are converted into a common currency using nominal exchange rates
- Each trading partner is weighted based on its share in:
- Imports
- Exports
- Or total foreign trade
This makes REER a comprehensive indicator of external competitiveness 🌍.