Relationsjip between cost of living and currency value?

Discussion in 'Economics' started by nooty, Mar 28, 2008.

  1. nooty


    whats the relationship between a countrys cost of living and its currency value?
  2. Obviously, the lower your currency goes compared to others, the higher the cost will be of anything that is imported. But that doesn't mean they will actually report that in the inflation numbers. The purpose of the reported numbers is to allow them to debase the currency and reduce the value of wages, handouts, and debt repayments.
  3. Absolutely, just dont forget to cross reference what the official figures are, Vs the primary economic drivers of your said country.
    Is it commodity driven, truly third world, or switzerland? Big differences in terms of longer term outlook, not something to be ignored.
  4. Daal


    the stronger the currency the better. just imagine if the dollar were to rally 10,000% overnight. US citizens would buy up everything from the rest of the world virtually for free. they would be able to sustain a high standard of living for a long-time, most would probably be able to retire and live off selling assets. exporters would go bust but the population is more important than a few special interest groups
  5. So each US$ would be worth 16 euros?
    Interesting ... :D :D :D :D :D
  6. nooty


    how is that calculated?
  7. jem


    tough question - How do you wish determine high currency value?
  8. Denmark, Norway and Sweden all have currencies that have gone up against the dollar and all three have a very high cost of living.

    There is a better relationship between average hourly wages and cost of living:

    high hourly wages = high cost of living

    low hourly wages = low cost of living