The real exchange rate refers to the exchange rate after the nominal exchange rate is adjusted, and different adjustment methods correspond to different meanings of the real exchange rate. Refers to the nominal exchange rate adjusted according to the price level of the two countries, that is, the relative price of foreign goods and domestic goods, reflecting the international competitiveness of domestic goods.

The exchange rate is calculated by multiplying the foreign price index by the domestic price index. Exchange rate after considering the influence of trade policies implemented by the government on relevant subjects, such as government subsidies for exports.

For domestic export enterprises, the actual exchange rate (that is, the actual exchange rate) is: S+ subsidy amount expressed in local currency/export amount expressed in foreign currency, and the meaning of S is the same as above.

Extended data:

computing formula

Real exchange rate and effective exchange rate are two important concepts in international financial research and decision-making. The real exchange rate and effective exchange rate are relative to the nominal exchange rate.

Nominal exchange rate refers to the published exchange rate. Expressed by formula:

Real exchange rate = nominal exchange rate, financial subsidies and tax relief

The real exchange rate is often used to study exchange rate adjustment, dumping investigation and anti-dumping measures, as well as to examine the actual purchasing power of money.

Another concept of real exchange rate refers to the nominal exchange rate minus the inflation rate.

Real exchange rate = nominal exchange rate-inflation rate

The second concept, the real exchange rate, aims to answer the influence of inflation on the nominal exchange rate. At the same time, it is often used to study the actual purchasing power of money.

classify

The real exchange rate is relative to the nominal exchange rate, and there are many different definitions of the real exchange rate according to different needs.

The first definition is the external real exchange rate;

The second definition is the internal real exchange rate;

The real exchange rate of the third definition refers to the nominal exchange rate plus or minus financial subsidies or tax relief;

The fourth definition of the real exchange rate refers to the nominal exchange rate MINUS the inflation rate;

The fifth definition of real exchange rate includes the comparison of labor productivity between the two countries.

As can be seen from the above definition of the real exchange rate,

First, the concept of real exchange rate is very important, but there are many kinds, which represent different theoretical and policy meanings, and involve at least two variables, so the policy can be interpreted in a complicated way;

Second, all the policy implications indicated by the definition of real exchange rate can finally be expressed by nominal exchange rate.

Baidu Encyclopedia-Real Exchange Rate