Parity Theories in the Global Economy

Maximizing the benefits from the global economy has always been the objective of stakeholders be they individuals, businesses and governments. But these benefits are subject to effective determination of foreign exchange rate parity. As the largest market which operates 24 hours round the clock and touches on every economy around the world every minute, its analysis is significant to the development of global economy. The value of the exchange rate parity theories to global economic development continue to attract authors to pay enormous attention to them in order to facilitate a better understanding of these issues and how best economies can make use of their application. It is on this light that this paper is written. The paper looks at some of the literature on parity theories, highlights some of the causal factors and assesses how they impact global economies, among others. Reading this paper will therefore enhance the knowledge of users as it uses basic knowledge, simple calculations and varied examples to deepen the understanding of one of the complex topics in International Finance. I therefore encourage all and sundry to make use of it.