Nearly all other non-US currencies have a lower value, according to this metric. I’m wondering if this means the US dollar is overvalued? Alternatively, the US dollar is valued for reasons other than purchasing power.
The actual value of a currency is not all that relevant. The Japanese Yen is worth less than the Indian Rupee, but the cost of living in India is a lot lower.
When talking about currencies being over or under valued, we're usually not referring to the value of 1 unit of each currency being equal, more the exchange rates themselves. See the Big Mac index for example, for a real life illustration. You can buy a Big Mac in the US for $X, and a Big Mac in India for INR Y, but $X doesn't necessarily buy you exactly INR Y in the market right now. Might buy you more or less, and if you're using the Big Mac as a standard you would say one of the currencies is over or under valued.
Currency exchange rates matter for tourism, buying foreign goods, foreign investment, working in a different country, businesses that rely on international trade, and so on. International trade matters in just about every country, as we can see in countries suffering from trade sanctions.
