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Explain the logic behind the application purchasing power price theory to explain changes in the spot...

Explain the logic behind the application purchasing power price theory to explain changes in the spot exchange rate? Simple but detailed response

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Purchasing power parity assumes that two goods should sell at the same price in two different geographies, Assuming there are no taxes or transportation costs (However, in real world these assumption don't hold true). Spot exchange rates move mostly to make this above theory good. So long as the theory doesn't hold true, There will be an arbitrage opportunity. So long as this opportunity persist there will be a deviation in exchange from its fair value. Continuous arbitrage shall ensure that the spot exchange rate moves to its fair value.

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