BIS Effective Exchange Rates Data Overview
The Bank for International Settlements (BIS) provides comprehensive data on effective exchange rates, which are used to measure international competitiveness and financial conditions. The data set includes both nominal…
The BIS effective exchange rates data set includes long time series on nominal and real effective exchange rates (NEER and REER), serving as measures of international competitiveness and components of financial conditions indices. These rates are calculated as geometric trade-weighted averages of bilateral exchange rates, with NEER representing nominal appreciation and REER reflecting real appreciation after adjusting for inflation differentials. The data set covers 64 economies for broad indices, while narrow indices include 26 and 27 economies for nominal and real indices, respectively (BIS Statistics). [1]
The weights used in calculating effective exchange rates are derived from manufacturing trade flows, capturing both direct bilateral trade and third-market competition through double-weighting. These weights are time-varying and updated every three years to reflect changes in trade patterns. For example, the effective exchange rates index for 2009 is calculated using trade weights from the 2008 to 2010 period (BIS Statistics). [1]
To ensure consistency and facilitate cross-country comparisons, the BIS publishes both narrow and broad indices. The methodology assumes a single type of good differentiated by country of origin, with a constant elasticity of substitution. This approach aims to ensure that changes in cross rates do not affect a country's macroeconomic aggregates as long as the real effective exchange rate remains constant (BIS Statistics). [1]
The BIS effective exchange rates data set includes long time series on nominal and real effective exchange rates (NEER and REER), serving as measures of international competitiveness and components of financial conditions indices. These rates are calculated using geometric trade-weighted averages of bilateral exchange rates, with the weights derived from manufacturing trade flows. This approach captures both direct bilateral trade and third-market competition through double-weighting, as noted in the BIS Statistics documentation (1). [1]
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Real effective exchange rates (REER) are derived by adjusting the NEER by relative consumer prices. Changes in the REER take into account both nominal exchange rate developments and the inflation differential against a basket of trading partners. The weights used in calculating effective exchange rates are time-varying on a three-year basis, ensuring consistency and facilitating cross-country comparisons. The BIS publishes both narrow and broad indices to support these analyses (1). [1]
The weights of the indices are derived from manufacturing trade flows and are updated periodically to reflect changes in trade patterns. For example, the effective exchange rates index for 2009 is calculated using the weights which refer to the period from 2008 to 2010. The BIS uses published US dollar exchange rates and consumer prices as inputs for the effective exchange rates, ensuring the accuracy and relevance of the data (1). [1]
The BIS effective exchange rates data set includes long time series on nominal and real effective exchange rates (NEER and REER), serving as measures of international competitiveness and components of financial conditions indices. The broad effective exchange rate indices cover 64 economies, while narrow indices include 26 and 27 economies for the nominal and real indices, respectively. Nominal effective exchange rates (NEER) are calculated as geometric trade-weighted averages of bilateral exchange rates. This methodology ensures that changes in exchange rates are reflected in a manner consistent with trade flows (source ID: 1). [1]
Real effective exchange rates (REER) are derived by adjusting the NEER by relative consumer prices. Specifically, changes in the REER take into account both nominal exchange rate developments and the inflation differential against a basket of trading partners. An increase in NEER indicates an appreciation in nominal terms, whereas an increase in REER corresponds to an appreciation in real terms. This approach allows for a more accurate assessment of a country's international competitiveness (source ID: 1). [1]
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The weights used in calculating effective exchange rates are derived from manufacturing trade flows. They capture both direct bilateral trade and third-market competition through double-weighting. To account for changes in trade over time, the weighting pattern is time-varying on a three-year basis. For instance, the effective exchange rates index for 2009 is calculated using the weights which refer to the period from 2008 to 2010 (source ID: 1). [1]
Sources
Prepared with AI assistance from the cited sources.
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