Higher exchange rates associate with higher per-capita GDP across countries
Comparing Official exchange rate (LCU per US$, period average) with GDP (constant LCU), per capita across 204 countries, 2017–2025.
- Rank correlation
- +0.64
- Holding size constant
- +0.68
- Countries compared
- 204
- Period
- 2017–2025
What might link these
Wealthier economies may have stronger currencies due to higher demand for their goods and services, while poorer economies often have weaker currencies. A careful reader should note that correlation does not imply causation, and reverse causality (stronger economies attracting investment and thus strengthening the currency) is also plausible.
Why this is not proof of anything
This is a correlation across countries, not an experiment. It cannot show that either indicator causes the other, and both may simply follow a third thing. The relationship could be driven by omitted variables like institutional quality or natural resource endowments, not a direct link between exchange rates and GDP.
The second figure above repeats the measurement with national population and income held constant. It is the more conservative number: a relationship that largely disappears there was mostly telling you that larger, richer countries have more of most things.
How this was measured
Both indicators were ranked across every country reporting each, and the two rankings compared — ranks rather than raw values, because a handful of very large countries can otherwise manufacture a relationship on their own. The calculation is arithmetic over figures already published on this site; the commentary above is drafted from the two indicator names and the resulting coefficients.