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• skybrian 2y ago
  Nearly all other non-US currencies have a lower value, according to this metric. I’m wondering if this means the US dollar is overvalued? Alternatively, the US dollar is valued for reasons other than purchasing power.
  • dosinga 2y ago
    The actual value of a currency is not all that relevant. The Japanese Yen is worth less than the Indian Rupee, but the cost of living in India is a lot lower.
    • skybrian 2y ago
      Currency exchange rates matter for tourism, buying foreign goods, foreign investment, working in a different country, businesses that rely on international trade, and so on. International trade matters in just about every country, as we can see in countries suffering from trade sanctions.
    • sudhirj 2y ago
      When talking about currencies being over or under valued, we're usually not referring to the value of 1 unit of each currency being equal, more the exchange rates themselves. See the Big Mac index for example, for a real life illustration. You can buy a Big Mac in the US for $X, and a Big Mac in India for INR Y, but $X doesn't necessarily buy you exactly INR Y in the market right now. Might buy you more or less, and if you're using the Big Mac as a standard you would say one of the currencies is over or under valued.