Exchange Rate Indices (ERIs)
Between the Bretton Woods Agreement in 1944 and the currency realignment of the Smithsonian Agreement in 1971, the US dollar provided one benchmark against which changes in the value of other currencies could be measured. This was because up to that time, the value of most currencies remained fairly stable in terms of the dollar, and significant "step" changes to exchange rates were infrequent and confined. Since 1970, however, there have been much larger movements in exchange rates and it can no longer be assumed that changes in rates against the dollar accurately indicate the overall change in the exchange rate for a currency.
To measure the overall change in the exchange value of a currency, a weighted average of the movements in cross-exchange rates against a basket of other currencies can be used, with the weights reflecting the relative importance of the other currencies, as measured by trade flows between the relevant countries. To reflect changing trade flows, effective exchange rate indices (ERIs) with different currency, weight compositions and methodologies have been introduced. On 1 January 1977, an ERI relating to 1972 trade flows (formerly 1969 trade flows) with a base date of 18 December 1971 (i.e. the date of the Smithsonian Agreement) was inaugurated. This was followed on 2 February 1981 by an index relating to 1977 trade flows in all goods and with a base year of 1975 = 100. This was replaced on 3 January 1989 by an index relating to weights derived from disaggregated trade flows in 143 manufactured products in 1980, and with a base year of 1985 = 100. This was subsequently updated to a base year of 1990 = 100 (see below for further details).
Discontinuation of Bank of England statistics for non-sterling effective exchange rates
From 2nd July 2018, the Bank intends to discontinue the calculation and publication of effective exchange rate indices (also known as exchange rate indices, ERIs) for currencies other than sterling. While there was some utility in having a single institution producing multiple daily ERIs, there are now alternative data sources with more relevant currency weights at this frequency and so there is no longer a good case for their continued production. This change relates to the 10 major economy currencies for which these data are calculated.
XUDLUSG – Effective exchange rate index, US $ (1990 average = 100)
XUDLADG – Effective exchange rate index, Australian Dollar (1990 average = 100)
XUDLERG – Effective exchange rate index, Euro (1990 average = 100)
XUDLJYG – Effective exchange rate index, Japanese Yen (1990 average = 100)
XUDLNDG – Effective exchange rate index, New Zealand Dollar (1990 average = 100)
XUDLSFG – Effective exchange rate index, Swiss Franc (1990 average = 100)
XUDLNKG – Effective exchange rate index, Norwegian Krone (1990 average = 100)
XUDLSKG – Effective exchange rate index, Swedish Krona (1990 average = 100)
XUDLCDG – Effective exchange rate index, Canadian Dollar (1990 average = 100)
XUDLDKG – Effective exchange rate index, Danish Krone (1990 average = 100)
There is no change to the calculation and publication of the sterling exchange rate index, which will continue to be available at daily, monthly and quarterly frequencies, with index weights updated annually. (See www.bankofengland.co.uk/statistics/sterling-exchange-rate).
Data users affected by this change may consider using the data series published by the Bank for International Settlements (BIS) as an alternative. The BIS monthly effective rates data are calculated on a narrow index basis for 26 economies back to 1964, and for up 61 currencies on a broad index basis with data back to 1994, and are subject to reweighting on a three-yearly cycle. In 2016 the BIS introduced a daily frequency of calculation for these data, with back-data available. These data, and extensive explanatory material, are publicly available at: www.bis.org/statistics/eer.htm.
For any enquiries or to notify us of any potential issues arising from this change please email Datareception@bankofengland.co.uk.