RER = (NER * CPIf)/CPId

where RER is the abbreviation of real exchange rate, representing the real exchange rate;

NER is the abbreviation of NominalExchange Rate, which means nominal exchange rate;

CPIf and CPId represent foreign and domestic consumer price indices respectively.

when the price of a standard commodity basket in China rises, it means that the exchange rate level drops, the purchasing power of local currency in foreign countries drops, and the e value of local currency; When the price of a domestic standard commodity basket falls, it means that the exchange rate level rises, the purchasing power of the local currency in foreign countries rises, and the local currency.