Guest guest76088 Posted January 12, 2013 Share Posted January 12, 2013 The 2.2 is not an exchange rate: it is just a ratio of comparison estimate of your spending power. If you earned 20000GBP in UK, then such spending power would be achieved by 44000AUD. If the currency exchange rate varied between UK and Australia or either country developed rampant inflation then you would have to revise your comparison. It's a rule of thumb, although the Economist does global cost of living surveys if you want to dig deeper and it compares costs of baskets of groceries, tailored shirts etc etc BigD Could someone please explain to me why some members say to use the exchange rate 2.2 to the £1 when working out cost of living, house prices and wages etc. BTW, if there is anyone in the Eurozone, do you use a different exchange rate? Thanks in advance. Link to comment Share on other sites More sharing options...
wakeboard1980 Posted January 12, 2013 Share Posted January 12, 2013 You know this for a fact? You know exactly where the source came from. Of course it is not coincidence that this is close to the long term historical average. What does it matter what the source is anyway... Long term historical average? Over what time period? Wasn't always like that when I was transferring money. It was around 2.4 for quite a while. Link to comment Share on other sites More sharing options...
fish.01 Posted January 12, 2013 Share Posted January 12, 2013 . Funny how it was you on another forum that said this. Well yes I would say the same on other forums wouldn't I? I'm not sure what you're implying? Link to comment Share on other sites More sharing options...
fish.01 Posted January 12, 2013 Share Posted January 12, 2013 ...Oh silly me for not realising that it was *nothing* to do with the exchange rate but was to do with dividing respective average salaries (which also presumably have nothing to do with the exchange rate). Honestly Fish, you do not seriously think that you are the first person in the world to think about prices and salaries and exchange rates do you. These things are not linked by coincidence. Anyway at least we are agreed that the 2.2 is a decent rul eof thumb. We were asked a question about where the 2.2 came from on the expat forums...I answered it honestly as I remember and there was no intention of disparaging others answers just a simple honest recall of memory...we're weren't asked what was influenced by what in broad economic theory...it was specifically about where the PIO/BE 2.2 came from....I find it hard enough trying to explain to people who don't understand it, why the average salary rate is far better rate to use than the exchange rate when working out salaries or costs, without introducing the complexity of one influencing the other over time and them being broadly related. For those who understand that they don't need my spiel about the basics. Link to comment Share on other sites More sharing options...
JonnoA Posted January 12, 2013 Share Posted January 12, 2013 This may help... http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Australia&city1=Sydney&country2=United+Kingdom&city2=London Know it doesn't directly answer the question but al least it has samples from a few hundred people's input... Link to comment Share on other sites More sharing options...
Candygirl Posted January 12, 2013 Author Share Posted January 12, 2013 Thanks for all the input. Link to comment Share on other sites More sharing options...
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