fx_purchasing-power-parity
Estimates fair value of an FX rate using purchasing power parity. Provide domestic and foreign inflation rates and base spot rate to get PPP-implied fair value and percentage over/undervaluation.
Instructions
Purchasing power parity fair value estimation.
Use when estimating fair value of an FX rate using PPP. Provide domestic and foreign price indices and base-period exchange rate. Returns: PPP-implied fair value rate and over/undervaluation percentage.
Input Schema
| Name | Required | Description | Default |
|---|---|---|---|
| time_years | No | Time horizon in years | |
| base_spot_rate | Yes | Current spot exchange rate | |
| foreign_inflation | Yes | Foreign inflation rate | |
| domestic_inflation | Yes | Domestic inflation rate |