Purchasing Power Parity can be referred to as an economic theory by which currencies of different nations are compared through an approach of “basket of goods.” As per this concept, 2 currencies are at par or in equilibrium when pricing of a basket of goods (the rate of exchange being considered) in both countries are same. The law of one price is related closely to purchasing power parity. The law of one price can be referred to as the economic theory by which prediction is made that the cost in nation X for something ought to be same as that in nation Y after differences in the rates of exchange and rates of interest are taken into consideration (Amadeo, 2019).