How to calculate the real exchange rate?
Hello, I would like to know how to calculate the real exchange rate.
Eduard
7 years ago
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Steven J
Currexy.com
7 years ago
Eduard, the real exchange rate is the nominal exchange rate adjusted for the different rates of inflation between the two currencies. It is the purchasing power of a currency relative to another at current exchange rates and prices. This is the formula of the real exchange level:
R – the real exchange rate;
e – nominal domestic-currency price of foreign currency;
Pu – foreign price level;
P – domestic price level.
Answer