Download Tenge Real Effective Exchange Rate Index (REER)

METHOT OF TENGE REAL AND EFFECTIVE EXCHANGE
RATE INDEX CALCULATION
Tenge Nominal Effective Exchange Rate Index (NEER) is calculated as the
weighted average product of changes in the nominal exchange rates of tenge to the
currencies of partner countries:
nk
wk
REER   ( Ierk ) *100 ,
k 1
Ier k – change in the tenge's exchange rate to the currency of the country k.
Tenge Real Exchange Rate Index (RER) is calculated as change in the
nominal bilateral exchange rate (of foreign currency for one tenge) adjusted for the
changes in consumer prices in the Republic of Kazakhstan and in the partner country:
RERk 
Ierk
*100
(CPI _ KZ / CPI _ k )
,
where RER k – RER with respect to country k,
Ier k – change in the tenge's exchange rate to the currency of the country k,
CPI _ KZ – change in the consumer price index in Kazakhstan,
CPI _ k – The change in the consumer price index in the partner country.
Tenge Real Effective Exchange Rate Index (REER) is calculated as a
weighted average product of changes in the real exchange rates of tenge to the
currencies of partner countries. The shares of the respective countries in the foreign
trade turnover are used as weights:
nk
REER   ( RERk )
k 1
wk
*100
,
where REER – summary REER index,
wk
nk
 ( RER
k
)
– product of changes in RER indexes to the currencies of partner
countries weighted by specific weights in Kazakhstan's commodity turnover.
k 1
The selection of the partner countries is made annually on the basis of the data
of the Committee on Statistics of the Ministry of National Economy of the Republic
of Kazakhstan. The calculation uses the data of exports and imports for 3 years. The
main trading partners are countries, the share of trade with which in the total trade
turnover is at least 0.5%. At the same time, the sample of countries - major trade
partners should cover at least 90% of the total turnover.
It should be noted that for analytical purposes, the National Bank of the
Republic of Kazakhstan calculates indexes of effective exchange rates also on the
basis of trade weights calculated with the exception of trading operations with oil and
gas condensate. The impact of exchange rates on the competitive advantages of
energy exporters and importers is insignificant, since in this case the determining
factor is the change in world prices. Therefore, the calculation of the effective
exchange rate index without oil can provide a more adequate estimate of the effect of
changes in the exchange rate on the volume and structure of foreign trade.