NEER and REER
SPARK96
reer_and_reer.docx
1. Study the figure below on India’s nominal and real effective exchange rates during 2000-2012 and answer the following questions.
1.1. Explain, giving reasons, what you can conclude from the above figure about India’s overall competitiveness in international markets from around 2006 onwards to May 2011 – has it improved or gone down?
1.2. What do you infer is the main reason for the change in competitiveness: changes in the value of the Indian Rupee relative to other currencies OR differences in inflation between India and its trading partners?
