Purchasing Power Parity
Calculate PPP exchange rate. Formula: PPP = Price in Country A / Price in Country B. Compares purchasing power across currencies. Educational.
Formula
PPP = Price(A) / Price(B)
$100 vs 75€, actual rate 1.2
Inputs
- Good Price in Country A: 100
- Good Price in Country B: 75
- Current Exchange Rate (A/B): 1.2
PPP ≈ 1.33 (Euro undervalued)
Frequently asked questions
Why used?
Determine if currencies are over/undervalued