purchasing power parity (ppp) model in forex.

Purchasing Power Parity (PPP) Model in Forex.

Purchasing Power Parity (PPP) Model in Forex Trading Introduction. Forex (Foreign Exchange) ya currency trading aik international market hai jahan currencies (sikkay) khareed-o-farokht kiye jate hain. Yahan, currencies ki qeemat barhti aur ghatey rehti hai jis ki wajah se traders ko currency pairs mein invest karte waqt in ki qeemat ka tayyun karna hota hai. Is maqsad ke liye, Forex market mein kai tarah ke models istemal kiye jate hain. Ek aham model Purchasing Power Parity (PPP) hai. purchasing Power Parity (PPP) Model currency ki qeemat ka tajzia karne ka aik model hai jis se currency exchange rate ka tayyun kiya jata hai. PPP model ki bunyad ye hai ke ek currency ki qeemat uski purchasing power se jori jati hai. Yani, ek currency ki value uss currency se khareedai jane wali cheezon par depend karti hai. How to Understand Purchasing Power Parity model and it's Procedures. Purchasing Power Parity model ko samajhne ke liye, hum "Big Mac Index" ki misal le sakte hain. Big Mac Index mein McDonald's restaurant ki popular burger, Big Mac, ki qeemat different countries mein compare ki jati hai. Agar ek Big Mac ka price USA mein $4 hai aur Pakistan mein 300 Rupees, toh exchange rate ke hisab se 1 USD ki value 75 Pakistani Rupees hogi.Purchasing Power Parity model Model mein "Real Exchange Rate" ka concept istemal hota hai. Real exchange rate, local currency ki qeemat foreign currency mein tabdeel kar ke measure karta hai. Agar Real Exchange Rate ka tayyun karne ke baad dono mulkon mein same Big Mac ki qeemat milti hai, toh currencies ki exchange rate ko PPP model ke hisab se fair aur accurate samjha jata hai. Purchasing Power Parity explanation. Purchasing Power Parity model mein purchasing power parity ka tayyun karna important hai. Yeh us mulk ki kharidari shakti ko measure karta hai jahan currency khareedai jati hai. Agar ek mulk mein Big Mac ki qeemat kam hai compared to another country, toh uss mulk ki currency undervalued (kam qeemat wali) samjhi jati hai aur exchange rate ko PPP model ke hisab se badhaya jata hai.Forex market mein Purchasing Power Parity (PPP) Model currency exchange rate ko samajhne ka aik important tool hai. Ye model currency ki purchasing power aur kharidari shakti ko consider karta hai. PPP Model ke istemal se traders currency pairs ko analyze kar sakte hain aur overvalued ya undervalued currencies ke saath trade kar sakte hain. Iske saath hi, PPP Model ke limitations ko bhi samajhna zaruri hai aur dusre models ke saath combine karke currency trading decisions leni chahiye. Exemple. Purchasing Power Parity Model ki samajh ke liye ek misal dekhte hain. Agar USA mein Big Mac ki qeemat $4 hai aur Pakistan mein 300 Rupees, toh PPP model ke hisab se exchange rate 1 USD = 75 PKR hai. Agar actual exchange rate 1 USD = 100 PKR hai, toh Pakistani Rupee overvalued (zyada qeemat wali) samjhi jati hai. Iska matlab hai ke PPP Model ke hisab se Pakistani Rupee ka value zyada hona chahiye. Benifits and limitations of Purchasing Power Parity Model. Purchasing Power Parity Model ke exchange rate ko samajhne aur analyze karne mein madadgar hota hai. Isse traders currency ke fair value ka andaza laga sakte hain aur overvalued ya undervalued currencies ke saath trade kar sakte hain.PPP Model ke kuch limitations bhi hain. Ye model long-term trends ke liye zyada applicable hai aur short-term fluctuations ko ignore karta hai. Iske ilawa, PPP Model assumptions par bhi depend karta hai, jaise ke ek perfect competition market aur zero transportation cost.

POWER PARITY MODEL (PPM)

INTRODUCTION Power Parity (PPP) Model ka forex trading mein istemaal karne se pehle, humein iski tafsiliyat aur uski ahmiyat ko samajhna zaroori hai. Power Parity Model currency exchange rate ko samjne aur anticipate karne ke liye ek economic theory hai. Yeh theory samjhti hai ke do mulkon ke currencies ke exchange rate mein tabdeeli wazeh hoti hai jab dono mulkon ke mein prices mein tabdeeli hoti hai. DETAILS Power Parity Model ka basic concept hai ke ek mulk ki currency ki value us mulk ke mehenge aur saste products aur services ke comparison mein define hoti hai. Agar koi product ya service ek mulk mein sasti hai aur doosre mulk mein mehengi hai, toh iska matlab hai ke pehle mulk ki currency doosre mulk ki currency se kamzor hai. BASIC UNDERSTANDING OF PPM PPM ki ek example samajhte hain. Samjhein ke USD/EUR currency pair ka exchange rate 1.10 hai. Agar PPP model ke mutabiq dollar overvalued hai, matlab ke dollar ki purchasing power zyada hai compared to the euro, toh traders expect karte hain ke future mein dollar ka value kam hoga. Is situation mein traders dollar bech kar euro khareedenge. Jab dollar ka value kam ho jaye aur euro ka value zyada ho jaye, toh traders dollar ko kam keemat par khareed kar usay baad mein zyada keemat par bech kar profit kama sakte hain. FEATURES Power Parity Model ko istemaal karne ke liye, traders aur investors currency exchange rates ki tabdeeliyon ko analyze karte hain. Jab ek currency ki value doosre currency ke comparison mein badhti hai, tab traders us currency ko kharidte hain taake wo is badhte huye trend se faida utha sake. Power Parity Model ke istemaal se traders ko currency market mein trends ko anticipate karne mein madad milti hai. ADVISE FOR TRADERS PPM ke istemaal se traders long-term trading strategies develop karte hain. Yeh model long-run equilibrium ke assumption par based hota hai, is liye short-term fluctuations aur market noise ko ignore karta hai. Is model ka istemaal karne se pehlay, traders ko price index aur inflation data par nazar rakhna zaroori hai. PPM ke istemaal se traders currency pairs ki valuation karne ke liye price index aur inflation data ka istemaal karte hain. Price index ek measure hota hai jo mulk ki overall price level ko represent karta hai. Inflation data bhi currency pairs ki valuation mein ahmiyat rakhta hai, kyun ke high inflation ki wajah se currency ki purchasing power kam hoti hai. TRADING STRATEGY Power Parity Model ka istemaal karne ke liye, traders aur investors ko kuch steps follow karne hote hain: Data Collection: Power Parity Model ke liye data collection zaroori hai. Traders ko mulkon ke inflation rates, GDP growth rates, aur consumer price indexes (CPI) jaise economic indicators ke bare mein jankari gather karni hoti hai. Exchange Rate Calculation: Power Parity Model ke liye, traders ko currencies ke exchange rates calculate karne hote hain. Exchange rates ke calculations mein ek currency ke price ko doosre currency ke price ke comparison mein analyze kiya jata hai. Deviation Analysis: Power Parity Model ke liye, traders ko currencies ke exchange rates mein deviation analyze karni hoti hai. Agar exchange rates model ke expectations se zyada change ho rahe hain, toh traders isko buy ya sell karne ke decisions lete hain. Arbitrage Opportunities: Power Parity Model traders ko arbitrage opportunities ki pehchan karne mein madad karta hai. Jab exchange rates model ke expectations se zyada change hote hain, toh traders currency buy ya sell karke is opportunity se faida uthate hain. Risk Management: Power Parity Model ke istemaal mein, risk management ka bhi zaroori hissa hai. Traders ko stop-loss orders aur take-profit orders ka istemaal karna chahiye taake wo apne trades ko control kar sake. SUMMARY Power Parity Model ke istemaal ke fayde aur nuksan bhi hote hain. Iska fayda ye hai ke traders ko currency market ke trends ko samajhne mein madad milti hai. Lekin iska nuksan ye hai ke real-world conditions aur other factors currency exchange rates par bhi impact dalte hain, jaise political events, economic policies, aur market sentiments. Isliye, Power Parity Model ko lagbhag ek indicator ki tarah istemaal kiya jata hai aur traders ko dusre factors ko bhi consider karna chahiye.

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Purchasing Power Parity (PPP)

Forex market mein trading ki kamyabi, sab se successful trades ko sahi tarah se determine karne ki salahiyat par mabni hai. Yahan par currency movement ko sahi tarah se forecast karne ke tariqay ka istemal kiya jata hai. Lekin, durust forecasts banane ke liye, market ki technical analysis ke ilawa fundamental factors ko samajhna aur analyze karne ki zaroorat hai, jo ke currency rates ko asar andaz karte hain. Inme se sab se ahem factor woh hain jo mulk ki global financial market mein position ko darust karti hain aur lambi dor mein national currency rate ko asar andaz karte hain.


"Purchasing power parity wo economic indicator hai jo countries ki different economies ki state ko sab se sahi taur par characterize karta hai. Iski madad se alag alag national currencies ki "value" ko compare kiya ja sakta hai aur ye seedhe prices se mutasir hoti hai: agar prices barh jati hain, to purchasing power kam ho jata hai (aur reverse bhi)."


Purchasing power parity ka concept exchange rates tay karne ki theory ke tor par paida hua hai. Iski aksar wajah Swedish economist aur Stockholm University ke professor Gustav Cassel ko kaha jata hai. Cassel ki theory ka maqsad practical tha. Us dor mein, jab World War I khatam hone ke baad nai dunia ki financial system shuru hui aur gold standard ka khatma hua, tab alag mulkon ke darmiyan currencies ke "sahi" ratios ki zaroorat thi, bina precious metals ke exchange ke.
Cassel ki asal theory ke mutabiq, free trade conditions mein currencies ke exchange rate ka value unke purchasing power ke ratio se decide hota hai. Is definition ke mutabiq, currencies ke exchange rate ka value us mulk mein depend karta hai jahan se woh currency issue hoti hai, aur is ratio ko purchasing power parities kehte hain.
Cassel ne yeh bhi kaha tha ke agar free trade conditions ko tora jaye, to exchange rate purchasing power parities se deviate ho sakta hai, lekin yeh deviation zyada significant nahi hoga aur temporary hoga.
Yeh version, jo absolute purchasing power parity kehlata hai, chronologically theory ki sab se pehli version hai. Isne jab se scientific circulation mein aya hai, is par bohot si debates hui hain, lekin yehi basis hai jis par purchasing power parity ka concept international comparisons ki practice mein istemal hota hai.
Purchasing power parity theory mein kuch currencies aur goods shamil ho sakti hain. Basic taur par, yeh ek currency ki quantity hai, jo ke doosri currency mein express ki gayi hai, aur jo same product ya service dono markets mein kharidne ke liye zaroorat hoti hai. Yeh theory ye kehti hai ke agar kisi cheez ki kimat ek common currency mein di gayi hai, to woh duniya bhar mein kahin bhi same price par available hogi.
Lekin purchasing power parity khud ek working theory nahi ho sakti, kyun ke isme logistics aur transaction costs ki value nahi hai. Haqiqatan mein, goods ko move karna zaroori hai, jo ke unki price ko barha deta hai. Yehi forex mein bhi hota hai, jahan trade costs, spreads, commissions, etc. hote hain. Asal zindagi mein, goods ko move karna zaroori hai, jo ke unki price ko barha deta hai. Yehi forex mein bhi hota hai, jahan trade costs, spreads, commissions, etc. hote hain. Situational depend karta hai ke goods ki basket, prices, taxes, tariffs, etc. in sab cheezon se exchange rate mein more realistic price create hoti hai relative to purchasing power parity.
Purchasing power parity model ki functioning tabhi mumkin hai jab goods aur currency freely move hoti hain, lekin amal mein exchange rates usually parity se kafi deviate karte hain. Aur, ek ya doosri currency ki demand exchange par kai aur factors par depend karti hai.


Purchasing Power Parity Examples:

• Kai international organizations jaise ke World Bank, Eurostat, alag alag countries ke liye economic indicators ko ek hi currency (aam taur par U.S. dollars mein) mein publish karte hain, purchasing power parity par based exchange rates ke istemal se.
• Aik mashhoor example purchasing power parities ka hai "Big Mac Index," jo ke English weekly The Economist regularly calculate karta hai. Yeh index "Big Mac" ke prices par based hai, jo ke McDonald's restaurants mein different countries mein milti hain, aur yeh ek alternative exchange rate provide karta hai.
• Ek aur kam mashhoor index "iPod index" hai, jo ke Australian investment bank Commonwealth Securities ke dwara calculate kiya jata hai. Is index mein popular Apple MP3 player ke prices par based exchange rates provide kiye jate hain.

Law Of One Price Kya Hai?

Law of one price ke mutabiq, competitive markets mein, transportation costs aur official trade barriers (jaise ke duties) ke na hone par, agar kisi product ki price ek currency mein di gayi hai, to wohi price doosre countries mein bhi same currency mein express ki gayi price mein honi chahiye.
Jab trade unhindered aur cost-free hota hai, to wohi goods ko same relative prices par bechna chahiye chahe woh kahin bhi beche jayen. Hum yeh principle yaad karte hain kyun ke yeh national goods ki prices aur exchange rates ke darmiyan ek link banata hai.
Lekin purchasing power parity aur law of one price ke darmiyan ek farq hai: law of one price individual goods ke liye apply hota hai, jabke purchasing power parity consumer basket ke sab goods ke prices ke liye apply hota hai. Agar law of one price har product ke liye sahi hai, to purchasing power parity automatically comply hona chahiye jab tak different countries ke price levels calculate karne ke liye use hone wale consumer baskets same rehte hain.
Purchasing power parity theory ke supporters ke mutabiq, iski validity (khaas kar long term mein) ye nahi demand karta ke law of one price precisely followed ho. Unka kehna hai ke agar har commodity ke liye one price law follow nahi hota, to bhi prices aur exchange rates purchasing power parity ke determined ratio se zyada deviate nahi karna chahiye. Jab goods aur services temporarily kisi country mein aur sasti ho jati hain, to us country ki currency aur uske products ki demand kam hoti hai, jo exchange rate aur domestic prices ko purchasing power parity ke level par wapas lekar aata hai.


Law Of One Price Example:
To phir law of one price haqiqatan mein zindagi mein kaise manifest hota hai? Yeh currency rates, yaani forex mein kaise asar andaz hota hai?
Maan lijiye ek hypothetical situation ko lekar chalte hain: agar hum ek product ko lekar sochen, jaise ke ek loaf of bread. Maan lo, India mein ek loaf of bread ki price 30 rupees hai, aur United States mein wahi loaf 2 dollars mein bechta hai. Iska matlab dollar rate to rupee ke liye 15 rupees per dollar hona chahiye. Lekin agar real exchange rate 25 rupees/1 dollar hai, toh koi India se bread khareed kar use United States mein 2 dollars mein bech kar real exchange rate par do dollars ko 50 rupees mein convert kar sakta hai. Is tarah, har loaf ke liye 20 rupees ka return mil sakta hai.
Forex education aur law ke mutabiq, United States mein bread ki price kam ho jayegi, jabke India mein badh jayegi. Iska matlab dollar-rupee exchange rate kam ho jayega. End mein kya hoga? Bahut mumkin hai ke din ke end mein hum equilibrium aur ek naye rate dekhein.

Absolute Purchasing Power Parity (PPP)

Absolute purchasing power parity yeh kehti hai ke agar aap ek basket of goods ko ek country mein lete hain aur uski price ko compare karte hain ek identical basket of goods ke sath doosre country mein, use ek hi currency mein convert karte hue, to dono baskets ki prices same hogi. Yani agar country A ki price level 50% barh gayi aur country B ki price level waisi hi rahi, to country A ki currency ki value (country B ki currency ke comparison mein) 50% kam honi chahiye. Agar A ki price level 60% aur B ki 25% badhti hai, to currency A ki value currency B ke comparison mein sirf 28% kam hogi.
Absolute purchasing power parity theory ke mutabiq, agar domestic prices ka level foreign prices ke level ke mukable mein barh jata hai, to national currency foreign currency ke mukable mein proportionately depreciate hogi.
Absolute purchasing power parity theory ki value yeh hai ke isne national currency ki kamzori ka ek sab se ahem asal sabab zahir kiya hai - mulk mein domestic inflation, aur is tarah, exchange rate ko stabilize karne ka ek tareeqa bhi pesh kiya hai - inflation ko control mein rakhna aur mulk mein national currency ki purchasing power ko mazboot karna.
Absolute purchasing power parity theory ke drawbacks:

• Identical Baskets ki Difficulty: Alag-alag countries mein bechne wale homogeneous goods ki identical baskets banana aur inki prices ko measure karna bohot mushkil hai.
• Unrealistic Assumptions: Is theory ke istemal ke problems is theory ke unrealistic assumptions se judi hain. Amal mein, price equalization ke process ko trade barriers, transportation, aur transaction costs ki complexity, sath hi yeh bhi hai ke sab goods tradable nahi hote, sab currencies convertible nahi hote, etc. se complicated banata hai.

Relative Purchasing Power Parity Kya Hai?

Relative purchasing power parity yeh kehti hai ke exchange rates mein tabdiliyan do mulkon mein relative price levels mein hone wale tabdiliyon ke mutabiq hogi. Relative purchasing power parity ki bunyad yeh hai ke diye gaye muddat mein exchange rate mein hone wali tabdiliyan wohi hogi jo do mulkon mein price levels mein hone wali tabdiliyon ke mutabiq hogi.
Agar kisi mulk mein inflation dusre mulk se zyada hai, to baqi conditions same hote hue, national currency lambi dor mein depreciate honi chahiye. Asal mein, relative parity par based exchange rate ko predict karna current rate ko future period ke liye inflation rates ke mutabiq extrapolate karna hota hai.
Relative purchasing power parity theory par based rates, jo ke current market rates se deviate karte hain, se yeh idea utpann hota hai ke currencies parity se deviate ho jati hain, unhe "overvalued" ya "undervalued" kaha jata hai. Ek currency overvalued hoti hai agar uska real exchange rate purchasing power parities ke mutabiq tezi se barh raha hai, aur agar tezi se kam barh raha hai to usay underestimated kaha jata hai. Is point of view se exchange rate ki assessment ka serious practical value hota hai: national currency ki overvaluation, purchasing power parity ke itne hi tentative indicator ko consider karte hue bhi, export growth ko negatively affect karne wala factor maana jata hai.
To, agar fixed exchange rate ho, to mulk ko currency ko artificially devalue karna padega takay trade ko waisi hi level par wapas la sake. Floating rate mein, jo ke aksar developed countries mein hota hai, investors ek deficit wale mulk mein invest karna continue kar sakte hain, lekin sirf high-interest rates ke compensation ke sath. Aur zyada high-interest rates inflation ko kisi na kisi tarah lead karte hain. Sooner or later, pehle mulk mein jo goods ki basket hai, woh doosre mulk mein waisi hi price par pahunchegi.
Yehi scenario purchasing power parity se murad hai, aur, pehli nazar mein, yehan sab kuch mantuq lagta hai. Har saal, The Economist magazine "Big Mac" ke price comparative data publish karta hai, jo 80 countries mein burger ki price parity ke liye hone wale exchange rates ko dollars mein deta hai. Yeh study bhi currencies ke rates ko pound, euro, yen, aur yuan ke sath compare karti hai.
Yeh point yahan hai ke agar kisi country mein "Big Mac" zyada mehnga hai compared to others, to us country ki currency overvalued hai, agar kam hai to ye undervalued hai. Kaafi baar, overvalued currency agle saal gir jati hai, jabke undervalued wali badh jati hai. Organizations jaise ke World Bank aur doosre large banks bhi purchasing power parity ko calculate karte hain. Yeh parameter European Commission (price convergence ke term mein) ke dwara bhi monitor hota hai.


Simple Relative Purchasing Power Parity Example
Chaliye ek example dekhein, taake sab clear ho. Maan lo, Country B ki total price level base period se period "1" tak same rehti hai, jabke Country A ki total price level 50 percent barh jati hai, to relative purchasing power parity theory ke mutabiq, period "1" mein Country A ki currency ki value Country B ki currency ke comparison mein 50 percent se barhni chahiye (yani, Country A ki currency ko 50 percent depreciate hona chahiye) compared to base period.
Ye baat yaad rakhein ke jab absolute purchasing power parity theory exchange rate ko predict karne mein sahi hai, to relative purchasing power parity theory bhi sahi hoti hai, lekin jab relative purchasing power parity theory sahi hoti hai, to yeh nahi ke absolute purchasing power parity theory bhi sahi hogi. For example, agar capital flows, transportation costs, aur international trade ki free flow mein kisi bhi tabdili hoti hai, to absolute purchasing power parity theory chhod di jati hai, lekin relative purchasing power parity theory us samay galat conclusions nikal sakti hai.

Purchasing Power Parity Ke Drawbacks

Purchasing power parity theory ka sab se bada masla yeh hai ke yeh parity economists ne invent ki hai. Yeh balance haqiqatan mein haasil nahi ho sakta. Shuruwat karte hain yeh ke bohot se countries mein kuch sectors aur goods ke prices ko objective factors ke bajaye low level par rakha jata hai. Jaise ke United States mein grain crops ki production hamesha Japan se sasti hogi fertile soil aur behtar mausam ke wajah se. Asia ke emerging markets, jisme China bhi shaamil hai, cheap labor costs ka faida uthati hain, khaas kar clothing production ke context mein. In "irregularities" ko smoothen karne ke liye kai saal lagenge (agar yeh mumkin hai). Automobile industry ko USA aur Germany ke beech aur exchange rates ke beech correlation nikalna bohot mushkil hoga. Purchasing power parity theory ke mutabiq, Germany mein export growth nahi honi chahiye thi, lekin yeh hua.
Doosra: humare paas saaf measurement units bhi nahi hain. Yeh "basket of goods" kya hai? Average Japanese firm ya household ke liye yeh ek hota hai, jabke Britain, France, aur United States ke liye yeh doosra. Aisi ek basket ko "common denominator" par laane ka koshish karna nakam ho jayega: pehle toh kai factors ko neglect karna padega (jaise ke goods ki quality mein farq), aur doosra, data hamesha outdated hoga. For example, US mein haal hi mein handmade goods ki demand badh gayi hai, chahe woh soap ho ya clothes, aur aise goods mehngi hongi. Japan mein local rice American ya kisi aur rice se behtar consider hota hai. Aise quality factors relative value ke liye mukhya hote hain.
Ek aur point yeh hai ke kayi services sirf local level par provide hoti hain aur unhe national borders ke across nahi transfer kiya ja sakta. General hospitality, beauty services, aur repair crews sab local level par hote hain. Wahi services kisi country ke economy mein huge share bana lete hain - United States mein, for example, 65 percent. Dollar doosre currencies ke mukable ya toh giray ya barha, lekin in services ke payment aur price par iska bilkul koi asar nahi hota.
Purchasing power parity ka qanoon hatta ke ek country ke conditions mein bhi nahi kaam karta, toh kya kehna forex ke international currency market mein, jahan trader planet ke andar hi kamai karta hai. Is theory ki relative kamzori yeh hai ke isne free trade in goods bina tariffs, quotas, aur taxes ke assume ki hai. Isliye agar US new import duties announce karta hai, to domestically produced goods ki prices badhengi. Lekin yeh badheshah dollar ki purchasing power tables mein nahi dikhai degi.
Ek aur disadvantage yeh hai ke iska application ek limited standard set of goods ke liye hota hai, lekin services ke liye nahi jisme significant price differences hote hain. Aur currency rates ko affect karne wale factors mein se sirf inflation aur interest rates ki difference nahi hoti, balki isme press releases aur economic reports, asset markets, political developments, aur power balance bhi shaamil hote hain. 90s tak, purchasing power parity theory ki effectiveness ki thodi practical evidence thi.
Purchasing power parity theory ko sirf fundamental long-term analysis mein istemal karna chahiye. End mein, economic forces currencies ki purchasing power ko balance karenge, lekin yeh kaafi saal tak ho sakta hai. Usually, time horizon five to ten years hota hai.

Purchasing Power Parity Theory Aur Uska International Business Mein Kirdar

Purchasing power parity ko conversion factor ke taur par istemal karna duniya ki geo-economic tasveer ko kafi badal deta hai, developed aur developing countries ko qareeb laata hai aur unki global GDP mein unka hissa barhata hai.
Purchasing power parity ke istemal se GDP ke gap ko kam hone ke reasons mein shamil ho sakti hain, yeh woh differences ko eliminate karta hai jo kuch goods aur services ke groups ke liye hoti hain aur ek statistics fact hai. Is tarah, nominal exchange rates par based estimates ke mukable, purchasing power parities se low-aur middle-income countries ke GDP ko kafi zyada badhaya ja sakta hai, jabke high-income countries ke liye thoda sa kam hota hai. Developing countries ke liye, purchasing power parities ka istemal inko duniya ke GDP mein unka asli hissa aur dono groups ke darmiyan kisi bhi economic comparison mein ek zyada haqiqi tasveer hasil karne mein madad karta hai.
Is ke bawajood, maujood mushkilein aur yeh ke GDP national accounts ke system ka integral indicator hai, alag-alag countries aur regions ke liye is indicator ki values ko purchasing power parity of currencies par based calculate karna (exchange rate ke bajaye), inke economic size, economic potential, aur power ke bare mein zyada sahi kheyal hasil karne mein madad deti hai.

Purchasing power parity (ppp) model in forex.

Purchasing Power Parity (PPP) model forex mein ek important concept hai jo exchange rates ko explain karne aur predict karne ke liye use hota hai. Yeh model assume karta hai ke do different countries ke currencies ki purchasing power time ke saath equal honi chahiye.
PPP Model ka Basic Concept


PPP model ka basic idea yeh hai ke ek basket of goods ka price do different countries mein same hona chahiye jab exchange rates ko adjust kiya jaye. Agar price different ho, to currency appreciation ya depreciation ho sakti hai jab tak prices equal na ho jayein.
PPP ke Do Types

1. Absolute PPP:
   • Absolute PPP yeh state karta hai ke identical goods ka price different countries mein same hona chahiye jab unhe common currency mein measure kiya jaye. For example, agar ek basket of goods US mein $100 ka hai aur UK mein £80 ka hai, to exchange rate $1.25 per pound hona chahiye ($100/£80).
2. Relative PPP:
   • Relative PPP yeh suggest karta hai ke do countries ke inflation rates ke difference ko exchange rate changes reflect karna chahiye. Matlab, agar ek country ki inflation rate doosri country se zyada hai, to us country ki currency depreciate honi chahiye.

PPP Model ka Forex mein Use


PPP model forex traders ke liye useful tool hai kyunki yeh long-term exchange rate trends ko predict karne mein madad karta hai. Short-term mein, exchange rates par aur bhi factors influence karte hain jaise interest rates, political stability, aur market speculation. Lekin long-term mein, currencies tend to move towards their PPP value.
PPP ke Benefits

1. Exchange Rate Predictions:
   • PPP model long-term exchange rate movements ko predict karne mein madad karta hai. Traders aur economists iska use currency valuation aur future exchange rates ke estimate ke liye karte hain.
2. Inflation Impact Analysis:
   • PPP model inflation rate differences aur unka exchange rates par impact analyze karne mein help karta hai. Yeh economic policy decisions mein bhi useful hota hai.
3. Investment Decisions:
   • International investors PPP model ka use different currencies ki fair value determine karne aur investment decisions ko guide karne ke liye karte hain.

PPP Model ke Limitations

1. Short-term Fluctuations:
   • Short-term mein, exchange rates par aur bhi factors influence karte hain jo PPP model capture nahi karta. For example, interest rate differentials, capital flows, aur speculative activities.
2. Non-traded Goods:
   • PPP model non-traded goods ko consider nahi karta, jo different countries mein different prices par sell ho sakte hain due to local factors.
3. Market Imperfections:
   • Real world mein market imperfections aur trade barriers PPP model ke perfect price adjustments ko prevent kar sakte hain.

Conclusion


Purchasing Power Parity (PPP) model forex market mein ek valuable tool hai jo long-term exchange rate movements ko explain aur predict karne mein madad karta hai. Yeh model inflation rate differences ko account mein le kar currency values ko determine karta hai. Lekin short-term fluctuations aur market imperfections ke wajah se, PPP model ko other analysis tools ke saath use karna chahiye for better forex trading decisions.