Note the difference between the absolute and relative PPP. The absolute PPP indicates that the exchange rate has to reflect the ratio of two countries’ price levels. All the relative PPP requires is the changes in the exchange rate equal the changes in the ratio of the price level.

Dynamics of Relative PPP The theory holds that inflation will reduce the real purchasing power of a nation’s currency. Thus if a country has an annual inflation rate of 10%, that country’s currency will be able to purchase 10% less real goods at the end of one year.

Unlike absolute PPP, relative PPP predicts a relationship between changes in prices and changes in exchange rates, rather than a relationship between their levels. But the converse need not be true: relative PPP does not necessarily imply absolute PPP (if relative PPP holds, absolute PPP can hold or fail).

Thus the deviations from PPP of exchange rates can be thought of as real exchange rate movements in response to restrictions in goods arbitrage. In addition frequent monetary surprises would increase the size of the real exchange rate deviations by affecting nominal exchange rates more rapidly than goods prices.

Many methods of forecasting currency exchange rates exist. Here, we’ll look at a few of the most popular methods: purchasing power parity, relative economic strength, and econometric models.

Purchasing power parity is an economic indicator used to calculate the exchange rate between different countries for the purpose of exchanging goods and services of the same amount. So the formula of Purchasing Power Parity can be defined as : S = P1 / P2.

Purchasing power parity (PPP) will not be satisfied between countries when there are transportation costs, trade barriers (e.g., tariffs), differences in prices of nontradable inputs (e.g., rental space), imperfect information about current market conditions, and when other Forex market participants, such as investors.

How to Calculate Relative Purchasing Power Parity

1. Subtract one country’s inflation rate from the reference country’s inflation rate.
2. Add 1 to the compared country’s inflation rate.
3. Divide the difference in Step 1 by the sum in Step 2.

Purchasing power parities (PPPs) are the rates of currency conversion that try to equalise the purchasing power of different currencies, by eliminating the differences in price levels between countries.

One way to reach comparable (or equalized) values of goods and services between the countries is to apply the PPP exchange rate in the conversion. The PPP exchange rate is that exchange rate that would equalize the value of comparable market baskets of goods and services between two countries.

If you applied for your PPP loan via Womply, you can check loan application status at https://www.womply.com/ppp-status/. If you did not apply through Womply, you will need to contact your SBA-approved lender and request a status update.

90 days

Applications for loan forgiveness are processed by your lender. You need to fill out a PPP loan forgiveness application form and submit that to your lender. After you submit your application for forgiveness, your lender is required by law to provide you with a response within 60 days.

It’s forgiven 1.8 million of the applications it’s received and has only 242,000 in process. But it still hasn’t received 3.2 million applications out of the 5.3 million loans disbursed in 2020.

Why is my loan forgiveness application taking so long, even beyond 90 days? The SBA has resource constraints and loan forgiveness applications were/are held in a queue. SBA reviewers have had to climb a learning curve. They have never had to deal with anything quite like the PPP before.

Answer: If a PPP loan is not forgiven in full (including if there has been a reduction in the forgiveness amount for an EIDL advance), any remaining balance due on the PPP loan must be repaid by the borrower.

To apply for PPP loan forgiveness, use the SBA’s Loan Forgiveness Application form, Form 3508, or your lender’s equivalent form. You might be able to use Form 3508EZ or Form 3508S if you meet the eligibility guidelines. After completing the form and attaching any necessary documents, submit it to your lender.

Though the SBA has forgiven more than 30% of the 5.1 million PPP loans it approved last year, many lenders who originated loans of $2 million or more are still waiting to hear back from the agency months after their borrowers submitted paperwork.