Can Purchasing Power Show the True Value of the Naira?

Purchasing power can help compare currencies, but it cannot fully determine an exchange rate because the cost of living differs widely between countries. For example, if a loaf of bread costs ₦1,800 in Nigeria and $2.50 in the United States, the prices suggest one possible naira-to-dollar comparison. The same can be done with Coca-Cola, rent, transport and other everyday expenses. However, housing, wages, taxes, imports, productivity and local demand vary from one country to another. This means that averaging the prices of goods and services may show purchasing-power parity, but it will not always match the market exchange rate. Should Nigeria place more emphasis on purchasing power when assessing the true value of the naira?

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