Overvalued?
When someone says that a currency is over-valued, it means that he has his own idea of what the value should be, but it doesn’t match what people are paying for the currency in foreign-exchange markets. The key issue is this: On what basis does the person believe that some other value is correct? Usually, it’s something like this: If the currency were lower in value, it would make exports cheaper and make imports more expensive. If one believes (erroneously) that the path to prosperity is to export more than you import, then this line of reasoning might seem convincing.
