body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
background-color: #f9f9f9;
}
.calculator-container {
background: #fff;
padding: 30px;
border-radius: 8px;
box-shadow: 0 4px 6px rgba(0,0,0,0.1);
margin-bottom: 40px;
}
.calculator-header {
text-align: center;
margin-bottom: 25px;
border-bottom: 2px solid #0056b3;
padding-bottom: 10px;
}
.calculator-header h2 {
margin: 0;
color: #2c3e50;
}
.currency-row {
border: 1px solid #e0e0e0;
padding: 15px;
margin-bottom: 15px;
border-radius: 6px;
background-color: #f8f9fa;
}
.currency-title {
font-weight: bold;
color: #0056b3;
margin-bottom: 10px;
display: block;
}
.input-group {
display: grid;
grid-template-columns: 1fr 1fr 1fr;
gap: 15px;
}
.input-wrapper {
display: flex;
flex-direction: column;
}
label {
font-size: 0.85em;
font-weight: 600;
margin-bottom: 5px;
color: #555;
}
input[type="number"] {
padding: 10px;
border: 1px solid #ddd;
border-radius: 4px;
font-size: 16px;
}
button {
width: 100%;
padding: 15px;
background-color: #0056b3;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: bold;
cursor: pointer;
transition: background-color 0.3s;
margin-top: 10px;
}
button:hover {
background-color: #004494;
}
#result-area {
margin-top: 25px;
padding: 20px;
background-color: #e8f4fd;
border-radius: 6px;
border-left: 5px solid #0056b3;
display: none;
}
.result-value {
font-size: 2em;
font-weight: bold;
color: #2c3e50;
}
.result-label {
font-size: 0.9em;
color: #666;
text-transform: uppercase;
letter-spacing: 1px;
}
.interpretation {
margin-top: 10px;
font-size: 0.95em;
color: #444;
}
.article-content {
background: #fff;
padding: 40px;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0,0,0,0.05);
}
h1, h2, h3 {
color: #2c3e50;
}
p {
margin-bottom: 15px;
}
.formula-box {
background-color: #f4f4f4;
padding: 15px;
border-left: 4px solid #777;
font-family: monospace;
margin: 20px 0;
overflow-x: auto;
}
@media (max-width: 600px) {
.input-group {
grid-template-columns: 1fr;
}
}
function calculateNEER() {
// Retrieve inputs for Partner 1
var w1 = parseFloat(document.getElementById('w1').value);
var base1 = parseFloat(document.getElementById('base1').value);
var curr1 = parseFloat(document.getElementById('curr1').value);
// Retrieve inputs for Partner 2
var w2 = parseFloat(document.getElementById('w2').value);
var base2 = parseFloat(document.getElementById('base2').value);
var curr2 = parseFloat(document.getElementById('curr2').value);
// Retrieve inputs for Partner 3
var w3 = parseFloat(document.getElementById('w3').value);
var base3 = parseFloat(document.getElementById('base3').value);
var curr3 = parseFloat(document.getElementById('curr3').value);
// Validate inputs
if (isNaN(w1) || isNaN(base1) || isNaN(curr1) ||
isNaN(w2) || isNaN(base2) || isNaN(curr2) ||
isNaN(w3) || isNaN(base3) || isNaN(curr3)) {
alert("Please fill in all fields for the 3 trading partners with valid numbers.");
return;
}
if (base1 === 0 || base2 === 0 || base3 === 0) {
alert("Base exchange rates cannot be zero.");
return;
}
// Calculate total weight to normalize (ensure sum is 1 or 100%)
var totalWeight = w1 + w2 + w3;
if (totalWeight 0 ? "appreciated" : "depreciated";
var absChange = Math.abs(change).toFixed(2);
var message = "Compared to the base period, the domestic currency has
against this basket of currencies.";
if (Math.abs(change) < 0.01) {
message = "The domestic currency value has remained stable relative to the weighted basket compared to the base period.";
}
interpElement.innerHTML = message;
}
How to Calculate Nominal Effective Exchange Rate (NEER)
The Nominal Effective Exchange Rate (NEER) is a crucial economic indicator used by central banks, economists, and forex traders to gauge the strength of a domestic currency against a basket of foreign currencies. Unlike a bilateral exchange rate (e.g., USD/EUR), which compares only two currencies, NEER provides a multilateral perspective weighted by trade importance.
What is NEER?
NEER is an index that represents the weighted average value of a currency relative to the currencies of its major trading partners. The weights are determined by the volume of trade (exports and imports) between the nations. Because it is an index, it is usually expressed relative to a base period (where the index = 100).
- NEER > 100: The domestic currency has appreciated (strengthened) on average against the basket compared to the base period.
- NEER < 100: The domestic currency has depreciated (weakened) on average against the basket.
The Calculation Formula
Most official institutions (like the BIS or IMF) use the Geometric Weighted Average method for calculating NEER, as it mathematically handles volatility better than an arithmetic average. The simplified formula used in the calculator above is:
NEER = 100 × ∏ ( (E_current / E_base) ^ w )
Where:
- E_current: The current exchange rate (Foreign Currency per Domestic Unit).
- E_base: The exchange rate during the chosen base period.
- w: The normalized trade weight of the partner currency (where the sum of all weights equals 1).
- ∏: The symbol for the product (multiplication) of the series.
Step-by-Step Example
Let's calculate the NEER for "Country A" currency with two trading partners, Partner X and Partner Y.
Step 1: Determine Weights
Assume Country A trades 60% with Partner X and 40% with Partner Y.
Weights: wX = 0.6, wY = 0.4
Step 2: Check Exchange Rates
Exchange rates are quoted as Foreign per Domestic (e.g., how many units of X you get for 1 unit of A).
- Partner X: Base Rate = 1.5, Current Rate = 1.65 (Currency A strengthened).
- Partner Y: Base Rate = 100, Current Rate = 90 (Currency A weakened).
Step 3: Calculate Ratios
Ratio X = 1.65 / 1.5 = 1.10
Ratio Y = 90 / 100 = 0.90
Step 4: Apply Powers
Term X = 1.10 ^ 0.6 ≈ 1.0589
Term Y = 0.90 ^ 0.4 ≈ 0.9587
Step 5: Multiply and Scale
Product = 1.0589 × 0.9587 ≈ 1.0151
NEER = 100 × 1.0151 = 101.51
Interpretation: The NEER is 101.51, meaning the currency has appreciated by roughly 1.51% on a trade-weighted basis, even though it lost value against Partner Y.
Why Weights Matter
Weights are critical in NEER calculations. A significant depreciation against a minor trading partner will have a negligible effect on the NEER, whereas a small movement against a major trading partner (like the US or Eurozone) will move the index significantly. These weights are typically updated annually or every few years to reflect changing trade patterns.
NEER vs. REER
While NEER tracks nominal changes, it does not account for inflation differentials between countries. The Real Effective Exchange Rate (REER) adjusts the NEER by the ratio of domestic prices to foreign prices. REER is generally considered a better measure of actual trade competitiveness.