Pimpy 

There still seems to be some major confusion about what a real effective exchange rate is versus an actual nominal exchange rate…A Real Effective Exchange Rate is for assessing its trade capabilities…an increase in the nations REER is an indication that the exports are becoming more expensive and its imports are becoming cheaper.  It is losing its trade competitiveness.  So the REER is used to check out its competitiveness with other trade partners.  That’s it…It’s not the same thing as a nominal exchange rate…