Comment on How much should I pay for a Dollar next year?

Nithin Kamath commented on 05 Sep 2013, 11:35 AM

Abid Sep 5 2013, 4:37 pm
Hi Rohit,

That is a very very clever remark! And the theoretical answer is – YES!

Let me give a short cut breadcrumb trail

High inflation => High interest rate

High Inflation => Less valuable currency ( we call that purchasing power )

Less purchasing power => Cheaper currency

Put everything together 😉

But if you want to go all theoretical about it, I suggest a few links

rateparity”>http://en.wikipedia.org/wiki/Interestrateparity

rateparity”>http://en.wikipedia.org/wiki/Interestrateparity

powerparity”>http://en.wikipedia.org/wiki/Purchasingpowerparity

Cheers!
Abid

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