What is exchange parity

Parity refers to the gold parity ratio of each country when it adopted the gold standard system.

It also refers to the ratio of the pure gold content in a country’s standard and the pure gold content in other countries’ standard monetary units.

The Fund, established after the Second World War, sought national stability by requiring all member countries to set exchange parity for their currencies.

This parity must be expressed in terms of the exchange rate between the national currency and gold on 1 July 1974 or in terms of the amount of pure gold contained ($35 per ounce of pure gold, or 0.888671 grams of pure gold per unit of US $).