I'm curious about the PPP exchange rate. I've heard about it but I'm not entirely sure what it means. Could someone explain to me what a PPP exchange rate is?
6 answers
StormGlider
Mon Dec 23 2024
The concept of Purchasing Power Parity (PPP) is often used to compare the value of currencies.
SejongWisdomSeeker
Mon Dec 23 2024
Imagine a scenario where a basket of goods in the U.S. costs $101.
Martino
Mon Dec 23 2024
Meanwhile, the same basket of goods in the U.K. costs £71.
JamesBrown
Mon Dec 23 2024
With an exchange rate of $1.30 per £1, one can convert the cost of the basket in the U.K. into U.S. dollars.
Raffaele
Sun Dec 22 2024
By doing so, we find that the British basket costs $97.50 in U.S. dollars (£75 * $1.30).