Inflation Index: Real Estate vs. the Dollar

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Includes: CNY, ICN, UUP
by: Sanjeev Sharma

Currencies are adjusted based on the inflation of a country. The higher the inflation, the lower a country’s currency moves. However, the way inflation is measured from one country to another country is not the same. Some countries use Wholesale Price Index, others use Consumer Price Index. The index itself is composed of commodities and things that differ from country to country.

However, if inflation is about the cost of living, it should also include the cost of real estate.

With home prices going substantially down in the U.S. (whereas they are in bubble zones in the Asian economies of India/China), the cost of home purchase is becoming cheaper. Even inflation in commodities is lower in the U.S. compared to other countries.

Should it not have pressure on the US dollar to move up compared to Asian currencies?