​​​Constructing Industry-Specific Effective Exchange Rates for the Philippines: A Trade-Weighted Approach to Competitiveness​​

Alyssa Cyrielle Villanueva
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Alyssa Cyrielle Villanueva: Bangko Sentral ng Pilipinas

No 202603, BSP Discussion Paper Series from Bangko Sentral ng Pilipinas

Abstract: This study develops a methodology for constructing industry-specific nominal effective exchange rates (i-NEER) and real effective exchange rates (i-REER) in the Philippines. Using the Philippine Standard Industry Classification, 13 industry-level indices that cover the country's 13 major trading partners, were computed. The industry-level analysis captures trade dynamics that are often overlooked when using aggregate indices. This study’s computed i-NEERs and i-REERs use Producer Price Index, unlike the traditional effective exchange rate indices that use Consumer Price Index. The indices were calculated using a geometric chained methodology consistent with the Bangko Sentral ng Pilipinas’ approach in calculating aggregate effective exchange rate indices. This approach ensures consistency with official methodologies while enabling analysis at a more granular level. This methodology also shows that exchange rate movements often do not affect all industries equally. Hence, this study suggests that i-NEERs and i-REERs may better capture sector-specific trade dynamics that are not visible in aggregate indices and can serve as a complementary tool for analysis.

JEL-codes: F10 F31 F41 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2026-03
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Published as BSP Discussion paper No. 2026-03, May 2026

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Persistent link: https://EconPapers.repec.org/RePEc:bhd:dpaper:202603

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