Euro Watch

Exchange Rates, Purchasing Power Parities and Interest Rates

Purchasing power parity is the exchange rate that makes a given basket of goods equally expensive at home and abroad. Due to varying consumer preferences, the appropriate value of a country's currency appears high when the goods basket of this country is used and as low when the goods basket of another country is used. The diagram shows the purchasing power parities for a German, a U.S. and a standardised OECD goods basket. The areas near the OECD purchasing power parity indicate a normal, long-term situation for the exchange rate, from which short- and medium-term deviations are quite possible due to the international flow of capital and other reasons. Click here for Country Specific Purchasing Power Parities.

Economic Data: Diagram Service of the Ifo Institute

Euro Watch

Exchange Rates, Purchasing Power Parities and Interest Rates

Ten-Year Government Bond Yields in the Euro Area

Diagram Service of the Ifo Institute