The difference between the exchange rate and the effective exchange rate is this: An exchange rate is a price at which one currency can be exchange for another. It reflects the current market value of a currency in relation to another currency. The Real Effective Exchange Rate on the other hand is a more comprehensive measure that evaluates a country’s currency relative to a basket of other major currencies adjusted for inflation…The REER provides insights into a country’s international competitiveness by considering how much goods and services cost in different countries…They have a Real Effective Exchange Rate already. It’s being used…
