Purchasing power parity in forex model

Purchasing power parity in forex model

What is purchasing power parityqowat khareed ki barabari ( ppp ) sharah mubadla ke taayun ka aik muashi nazriya hai. is mein kaha gaya hai ke dono mumalik ke darmiyan qeematon ki satah barabar honi chahiye. is ka matlab hai ke krnsyon ke tabadlay ke baad har malik mein samaan ki qeemat aik jaisi hogi. misaal ke tor par, agar you ke mein coca cola ki qeemat 100p thi, aur yeh us mein $ 1. 50 thi, to ppp theory ke mutabiq gbp / usd ki sharah mubadla 1. 50 ( Amrici qeemat you ke ke hisaab se taqseem ) honi chahiye. taham, agar aap is waqt gbp / usd jori ki market exchange rate par nazar dalain, to yeh haqeeqat mein 1. 25 ke qareeb hai. tazaad is liye hota hai kyunkay un krnsyon ki qowat khareed mukhtalif hoti hai. kisi bhi asasay ki terhan, currency ki haqeeqi qader aur tasaworati qader hoti hai, jis par maliyati mndyan tijarat karti hain. PPP pemaiesh ka maqsad muqami qowat khareed ke farq ko adjust karkay do krnsyon ke darmiyan mawazna ko ziyada durust banana hai. PPP ke iqdamaat aalmi idaron jaisay ke world bank, aqwam mutahidda, bain al aqwami maliyati fund aur Europi union ke zariye barray pemanay par istemaal kiye jatay hain . Examplained prchizng power parity aik aam tool hai jisay traders is baat ka andaza laganay ke liye istemaal karte hain ke kab koi asasa ziyada ya kam qeemat hai. yeh ziyada tar forex joron aur astaks ka tajzia karne ke liye istemaal hota hai. qowat khareed barabari aur forex tajir PPP ki sharah aur sharah mubadla ke darmiyan kisi bhi tafawut ko currency ki taweel mudti passion goi aur qader ka andaza laganay ke liye istemaal kar satke hain. currency ke jore ki simt ka andaza laganay ke liye narkhon ka istemaal karna aur currency jore ko kharidne ya baichnay ke liye is ka istemaal karna mumkin hai. taham, yeh PPP ki hudood ki wajah se istemaal honay wala wahid iqdaam nahi hona chahiye. iqtisadi nazriaat mehez aik khayaal hain ke markitin kahan ja sakti hain, lekin qeemat ki naqal o harkat ke baray mein mazeed taraqqi Yafta nazriya haasil karne ke liye takneeki aur bunyadi tajzia ka istemaal karna bohat zaroori hai. forex trade karne ka tareeqa sekhen. nazriya yeh hai k tawazun ke aik nuqta par badal jayen gi. lehaza, agar sharah mubadla aur PPP ki shrhon ke darmiyan tafawut hai, to aik fard is markazi nuqta ki taraf tijarat karne ka iradah kar sakta hai. agar PPP ki sharah yeh batati hai ke aik currency doosri ke muqablay mein bohat ziyada hai, to aik tajir zair behas currency ko kam karne par ghhor kere ga. jabkay, agar PPP ki sharah se pata chalta hai ke usd ke muqablay mein currency ki qader kam hai, to woh market ka aik taweel nuqta nazar lainay par ghhor kar satke hain. PPP theory yeh manti hai ke currency ki qowat khareed mein kami, afraat zar jaisay awamil ki wajah se, sharah mubadla mein masawi kami ke mutradif honi chahiye. organization far economic cooperation and development ( o e si d ) salana PPP data jari karta hai - kuch tajir un adaad o shumaar ko Amrici dollar ke muqablay mein har currency ki qader ka andaza laganay ke liye istemaal karen ge, aur aglay saal ke majmoi rujhan ke baray mein faislay karen ge .

Assalamu Alaikum Dosto!

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) Forex Model: Ek Jaiza**
Forex market mein currencies ke exchange rates ko samajhne ke liye kayi economic theories aur models ka use kiya jata hai. Inmein se ek ahem aur influential theory "Purchasing Power Parity" (PPP) hai. PPP model currencies ke exchange rates aur inflation rates ke beech ka relationship explain karta hai. Aaj hum PPP model ko detail se samjhenge aur dekhenge ke yeh forex trading aur currency valuation ko kis tarah impact kar sakta hai.

**Purchasing Power Parity (PPP) Ka Concept**

Purchasing Power Parity ek economic theory hai jo ke yeh kehti hai ke currencies ki relative value unki purchasing power ke base par determine hoti hai. Iska matlab hai ke ek basket of goods aur services ki cost kisi bhi do countries mein same honi chahiye agar exchange rate bhi adjust kiya jaye. PPP model ko broadly do categories mein divide kiya jata hai: Absolute PPP aur Relative PPP.

1. **Absolute PPP**: Absolute PPP kehti hai ke exchange rate wo rate hona chahiye jisse ek basket of goods aur services ki cost ek country se doosri country mein same ho. Iska formula hai:
\[
E = \frac{P1}{P2}
\]
Jahan \( E \) exchange rate hai, \( P1 \) pehli country ki price level hai aur \( P2 \) doosri country ki price level hai.

2. **Relative PPP**: Relative PPP inflation rates aur exchange rate changes ke beech relationship ko explain karti hai. Yeh theory kehti hai ke agar ek country mein inflation rate doosri country ke comparison mein zyada hai, to currency ka value usi ke corresponding kam hoga. Iska formula hai:
\[
\frac{E1 - E0}{E0} = \frac{I1 - I0}{1 + I0}
\]
Jahan \( E1 \) future exchange rate hai, \( E0 \) current exchange rate hai, \( I1 \) future inflation rate hai, aur \( I0 \) current inflation rate hai.

**PPP Model Ke Faide**

1. **Currency Valuation**: PPP model currency ki undervaluation aur overvaluation ko assess karne mein madad karta hai. Agar PPP value real exchange rate se significantly different hai, to yeh indicate karta hai ke currency overvalued ya undervalued hai.

2. **Inflation Impact**: PPP model inflation rates ke impact ko exchange rates par samajhne mein madad karta hai. High inflation countries ki currencies ka value long-term mein girta hai, jabke low inflation countries ki currencies ka value stable rehta hai.

3. **Economic Comparison**: PPP model different economies ki purchasing power ko compare karne aur unki economic conditions ko samajhne mein help karta hai. Yeh model global economic analysis aur investment decisions ke liye useful hai.

**Limitations Aur Challenges**

1. **Basket of Goods**: PPP model ka basic assumption hai ke same basket of goods aur services ki cost globally same honi chahiye. Lekin, real-world scenarios mein, different countries mein goods aur services ki prices vary karti hain.

2. **Market Dynamics**: PPP model market dynamics aur short-term fluctuations ko consider nahi karta. Exchange rates short-term factors, jaise market sentiment aur geopolitical events, se bhi influence ho sakte hain.

**Aakhir Mein**

Purchasing Power Parity (PPP) model forex market aur currency valuation ke analysis ke liye ek important tool hai. Yeh model currencies ke exchange rates aur inflation rates ke beech relationship ko samajhne mein madad karta hai aur long-term economic analysis aur investment decisions ke liye useful hota hai. PPP model ko samajhkar aur use karke, traders aur investors market ke trends aur currency movements ko better predict kar sakte hain.