Why does the value of currency in a country relative to others matter if there is PPP anyway?

Question by Hoping for a good future ahead: Why does the value of currency in a country relative to others matter if there is PPP anyway? (e.g. how does having a devalued currency make exports cheaper and imports more expensive when there is PPP in every case.

Best answer:

Answer by simplicitus
You clearly don't understand what PPP is all about. http://en.wikipedia.org/wiki/Purchasing_power_parity What you buy is a mixture of locally produced goods and imported goods. For locally produced goods, the real costs are in the local currency. Exchange rates don't enter into it. Imported goods are subject to the law of one price: http://en.wikipedia.org/wiki/Law_of_one_price so you have to pay at least the nominal exchange rate for them (more if shipping, etc. are issues). PPP is an estimate of the resulting average for a "typical" basket of goods.

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