REER of NT-Dollar Stays Below That of Korean Won in May

The real effective exchange rate (REER) index for the New Taiwan dollar edged up a little from a month earlier to 100.21 in May, staying lower than that of its major external trade rival South Korea's currency for the 11th consecutive month, according to the statistics released by the Bank for International Settlement (BIS).

In the same month the REER index for the Korean won showed the third consecutive monthly rise to 112.23 and its exchange rate with the US dollar rose 1.28%, almost double the corresponding 0.69% of the NT dollar.

And China saw the REER index for its renminbi at 114.05 in May, down 2.07 from 116.12 of a year earlier.

Financial experts indicate that the nominal exchange rate is simply the price of one currency to another, and REER is the weighted average of a currency relative to an index or basket of other major currencies adjusted for  inflation. Nominal exchange rate typically remains flexible while real exchange rate  reflects economic fundamentals. (JL)