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CURRENCY STRATEGIES IN A BALANCED PORTFOLIO
CURRENCY STRATEGIES IN A BALANCED PORTFOLIO
Prescient Asset Management
Q2 of 2023 | 2 years ago
Purchasing power parity is the seductive theory that all assets cost the same everywhere relative to one base unit of account. This means that one cup of coffee should cost $1 in the US and $1 in South Africa. This $1 cost converted into rand mean we would pay R14 for a cup of coffee. If they do not cost the same there’s an incentive for trade to bring the discrepancy back in line.