Real Effective Exchange Rate - REER

REERRRR…screech. REER’s are always on the move. What a life.

The real effective exchange rate (REER) is a way to compare currencies of different countries. REER is the weighted average of one currency compared to a group of other nations’ currencies, adjusting for inflation and trade.

REER allows us to see which countries are gaining a competitive edge on others, and which are falling behind. A lot of this has to do with each country’s trade game. It’s like the Olympics of international currency. You can watch it live at the World Bank. Okay, you can’t watch it live, but the World Bank does publish REERs on the reg.

The biggest stars of the REER games? The U.S. dollar, the Japanese Yen, and the Eurozone Euro.

If you’re looking for investing parameters, you can skip REER and just head straight to currency exchanges. REER is more for governments comparing themselves to each other, which isn’t as helpful as the pure currency exchange rates for traders.