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Hatredcopter (Offline)
In the middle of nowhere!
Posts: 537
Join Date: May 2007
Location: 山口県
06-22-2007, 06:08 AM

Originally Posted by Maku View Post
Wait, does that mean that the GB pound is doubly stronger, if £1 = ¥247?

That must be really annoying if you keeping building up ¥1 coins >.<
No, it doesn't mean it's doubly stronger, for the exact same reason that the dollar isn't a hundred times stronger than the yen. This is called nominal exchange rate - it would APPEAR that the Great British Pound is twice as strong as a dollar, but that's not quite the case.

What you want is the the real exchange rate (RER). I only took one beginners course in macroeconomics, so here's the definition off Wikipedia

The real exchange rate (RER) is an important concept in economics, though it is quite difficult to grasp concretely. It is defined by the model: RER = e(P*/P), where 'e' is the exchange rate, as the number of home currency units per foreign currency unit; where P is the price level of the home country; and where P* is the foreign price level.

See more here -> Exchange rate - Wikipedia, the free encyclopedia
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