Calculating the effect of exchange rates

Conducting an analysis across markets by converting costs to a single currency can allow for direct comparison between markets. However, any devaluation or revaluation of a currency impacts both the wage levels and the overall construction cost.

We use the USD as the common currency for comparison throughout this report. Therefore, it is important to consider the impact on the construction costs by changing exchange rates relative to the US dollar. If the exchange rate of a country strengthens against the US dollar its construction costs will rise, even if costs within the local currency remain unchanged. A falling exchange rate would create the opposite effect.

With exchange rates constantly fluctuating, this means that the reported construction costs in US dollars for several of the markets covered have also fluctuated as their relative exchange rates have changed during 2017. The chart shows the change relative to the US dollar for 2017 as a percentage. Some countries have seen a stronger exchange rate including Brazil, the Euro Countries, South Africa and the UK. Some countries have experienced a fall in the exchange rate including Argentina, Rwanda and Turkey.

 


This content is part of the International construction market survey 2018

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