Finance, Forex and Investments

If the real exchange rate rises does this mean that the domestic currency is becoming undervalued?

By following this equation r=eP*/P, a decrease in domestic prices( P ) leads to greater real exchange rate(r) which as I understand leads to the domestic currency becoming undervalued, where P* is the foreign price level and e is the nominal exchange rate. Am I being right?

Public Comments

1. Not undervalued. The term is devalued.