What is Relative Purchasing Power Parity (RPPP) ❓

What is Relative Purchasing Power Parity (RPPP) ❓

Relative Puchasing Power Parity (RPPP) is purchasing parity. equality while exchanges are in equilibrium. equalize the powers of the two countries related to exchange rates and inflation.

Equation of RPPP theory

Future Exchange Rate / Current Exchange Rate = (1+Domestic Inflation) / (1+Foreign Inflation)

In simple terms, if a country has a higher rate of exchange There will be a trend in the currency depreciation over sure enough.

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