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The BIS effective exchange rate (EER) indices have been expanded and updated. The new indices cover 52 economies based on a consistent methodology, and reflect recent developments in global trade by using time-varying weighting patterns. The newly calculated indices have been made available to the public on the BIS website.

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The new BIS effective exchange rate indices

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https://www.bis.org/publ/qtrpdf/r_qt0603e.pdf

The weighting pattern is time-varying. The weights are derived from manufacturing trade flows, and capture both direct bilateral trade and third-market competition by double-weighting. This trade-based weighting assumes that there is only one type of good differentiated by country of origin, with a constant elasticity of substitution. Ideally, the weights are such that a change in cross rates has no effect on a country's key macroeconomic aggregates as long as the real effective exchange rate remains constant.

The new BIS EER basket has been broadened to include 64 economies, to reflect the rising importance of the emerging market economies in Asia, central and eastern Europe and Latin America. Based on this basket, the EER indices (broad indices) for all 64 economies are calculated using a consistent methodology. The broad indices are available from 1994; prior to that date, some exchange rate, price and/or trade data were limited. Narrow indices comprise 26 and 27 economies for the nominal and real indices, respectively.

Monthly data are released around mid-month. Daily data are updated around mid-week. The publication date and the latest reference period are shown in the <a href='/release-calendar?filter=categoryId%3DEER'>Statistics release calendar</a>.

How often and when are the effective exchange rates updated?

Explore the effective exchange rates dashboard to get quick visual insights into our statistics, analyse country and global developments and build your own data stories. This data set measures the value of a currency against a basket of other currencies.

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https://dataviz.bis.org/t/DataPortal/views/eer/Main

Whenever available, the BIS uses the published data on <a href='/topics/XRU'>US dollar exchange rates</a> and <a href='/topics/CPI'>consumer prices</a> as input data to the BIS EERs. The monthly exchange rates used are the business day averages.

What are the main sources for the BIS effective exchange rates?

 Monthly and daily data are available, the latter available only as nominal indices. The so-called broad indices are available for 64 economies from 1994 and 1996 for monthly and daily data, respectively. In addition, narrow indices are available for 27 economies (26 for nominal indices) from 1964 and 1983 for monthly and daily data, respectively. 

What is the coverage of the effective exchange rates (EER) data set?

EER indices are calculated as the geometric weighted average of a basket of bilateral exchange rates. Real EER are the nominal EER indices adjusted with the corresponding relative consumer prices. They are typically used as a component of financial or monetary conditions, as an indicator of international price competitiveness and as a gauge for the transmission of external shocks. For example, an increase in the real indices indicates an appreciation, and hence, a decrease in international price competitiveness.

What are the BIS effective exchange rates (EERs) and why are they important?

Effective exchange rates (SDMX2.1 Compact)

For the methodology of the BIS effective exchange rates, see <a href='https://www.bis.org/publ/qtrpdf/r_qt0603e.pdf' target='_blank' rel='noopener noreferrer'>"The new BIS effective exchange rate indices"</a>, BIS Quarterly Review, March 2006.

Where can I find documentation and information on the methodology?

Effective exchange rates (SDMX2.1 Generic)

https://www.bis.org/statistics/eer/weightsb.xlsx

The coverage of the data set has been gradually expanded from 52 to 64 economies in 2023. In April 2019, the BIS excluded the currency of Venezuela from the broad basket indices.

What changes have been introduced in the effective exchange rates dataset since its initial release in 2006?

https://www.bis.org/statistics/eer/weightsn.xlsx

The weights are derived from manufacturing trade flows and capture both direct bilateral trade and third-market competition by double-weighting. For more details, see <a href='https://www.bis.org/publ/qtrpdf/r_qt0603e.pdf' target='_blank' rel='noopener noreferrer'>"The new BIS effective exchange rate indices"</a>, BIS Quarterly Review, March 2006.

To accommodate rapidly changing trade data, the BIS adopts time-varying weights in the EER calculations. More specifically, it assigns the three-year average trade weights of 1993-95, 1996-98, 1999-2001, 2002-04, 2005-07, 2008-10, 2011-13, 2014-16 and 2017-19 to the corresponding periods, and then constructs chain-linked indices. This last set of weights is also used to calculate EERs for the latest period until the next set of three-year trade data becomes fully available.

Which weights are applied to the historical and most recent data?

The weights of 1990-92 are applied to data prior to 1990.

In the published Excel file containing the trade weights, I cannot find pre-1990 weights, while the "narrow indices" are available from 1964. What weights are you using for those data prior to 1990?

The EER indices for euro area member countries are computed based on the legacy currencies prior to the adoption of the euro and the euro afterwards. EER indices for euro area member countries take intra-euro area trade into account, while the index for the euro area as an aggregate excludes intra-euro area trade.

What is the EER for euro area member countries?

 The index levels do not provide any information concerning the over- or undervaluation of a given currency. They show the change compared with the base year. For indices with a base year 2020, a level of 120 indicates an appreciation of 20% against the basket since 2020. 

Does the value below/above 100 implies undervaluation/overvaluation?