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I'm curious how the Hong Kong Dollar can be "undervalued" with respect to the US Dollar by 51.4% when it's pegged 1:7.8 PPP doesn't really mean that a currency
by arcticbull 5y ago
I'm curious how the Hong Kong Dollar can be "undervalued" with respect to the US Dollar by 51.4% when it's pegged 1:7.8
PPP doesn't really mean that a currency is 'undervalued' or 'overvalued' with respect to one another, just that local efficiencies or inefficiencies make procurement of a basket of goods relatively more or less expensive there relative to tradeable goods no?
- aidenn0 5y agoIn general island areas will show an "undervalue" for PPP measures. Hawaii Big Macs are more expensive than Indiana big macs, but that doesn't mean that Hawaiian USD are undervalued to Indiana USD.
- arcticbull 5y agoI think there is an argument to be made for regional PPP adjustment. SF USD are definitely worth far less than Mississippi USD.