The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency. The nominal exchange rate (NEER) only describes relative value which is an unadjusted weighted average rate of a country’s currency exchanges for a basket of multiple currencies. In real terms NEER cannot definitively show if a currency is strong to gain strength. It only describes whether a currency is weak or strong, compared to other foreign currencies. The real effective exchange rate (REER) is the weighted average of a country's currency with respect to other major currencies. These rates are determined by comparing the relative trade balance of a country's currency with the other country within the index. This exchange rate used to find the changes into account depending on the price level. Everything is depended on real and not nominal