Why is this important
REER is a key indicator of the economy’s external competitiveness. Its decrease increases the attractiveness of Uzbekistan’s exports and makes products cheaper in foreign markets. NEER reflects exchange rate stability without considering inflation.
Key facts
- REER (takes inflation into account) in August — 110.6%;
- NEER (without inflation) — 95.1%;
- Since the beginning of the year, REER has decreased by 3.9%;
- The starting point is September 2019 (100%);
- REER growth makes imports cheaper but hits exports;
- The decline in REER increases the competitiveness of Uzbek goods.
Context
REER and NEER are indices by which the Central Bank tracks the strength of the national currency against the currencies of trading partners, adjusted for inflation. The decrease in REER under stable NEER conditions indicates higher domestic inflation among partners and increased export potential of Uzbekistan.
