Global exchange rates moved sufficiently of late to prompt talk of a “currency war”. States and currency zones are hoping for a weak currency to generate momentum in their economies, especially in the export sector. The measures of various central banks aimed at staving off deflation are also affecting exchange rates. These circumstances make it more difficult to compare purchasing power in different currency zones.
Against this backdrop, we are particularly pleased to present you with the 16th edition of our Prices and earnings study, in which we compare purchasing power in 71 cities across the globe. Our analysis of more than 68,000 datapoints highlights the effects of political and economic events on prices and earnings, and reveals significant changes compared with the previous study three years ago.
The cities of Zurich and Geneva, for instance, have become markedly more expensive since the last study – mainly due to the Swiss National Bank‘s decision to abandon the EURCHF minimum exchange rate early this year.
Three years ago, the minimum exchange rate was set at CHF 1.20. Life in cities within the eurozone and in Tokyo, on the other hand, has become less expensive as the euro and yen have depreciated against the US dollar. And with the currencies of certain emerging markets falling significantly, price drops have been even more pronounced in those parts of the world.