exchange rate

[s]

hey guys please clarify this ..i have come across different definitions in different books

real exchange rate is defined as what?

RER=NER* P of foreign /P at home,
OR
RER=NER*P of Home/P of foreign

where NER= rupee per Dollar [let India be home cty]
OR NER= Dollar per Rupee

[Chocolate Frog]

In theory, it could be defined either way, I think; other variables would have to be specified accordingly. For example, if ε = e x P_foreign/P_domestic, NX(ε) will be increasing in ε, whereas if ε = e x P_domestic/P_foreign, NX(ε) will be decreasing in ε.

[Chinni18]

Hi s
Your definitions are both correct but the definition of NER within them would be different.

For e.g., if your nominal exchange rate says 56Rs/$ then your real exchange rate will be:
RER = NER * (Pu/Pi), where NER is 56Rs/$, Pi is price level in India and Pu is price level in USA.

On the other hand if your NER is 0.018$/Re, then your real exchange rate will be:
RER = NER * (Pi/Pu), where NER is 0.018$/Re, Pi is price level in India and Pu is price level in USA.