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Purchasing power parity principle

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Between 1980 and 1995, the ¥ / $ exchange rate moved from ¥226.63 against $1.00 to ¥93.96 against $1.00. During this same period (15 years), the consumer price index in Japan rose from 91.0 to 119.2 and the US consumer price index rose from82.4 to 152.4.

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Based on the purchasing power parity (PPP) principle, what would the ¥ / $ exchange rate have been in 1995? Show your workings

Reference no: EM131152751

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