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 The Economist: Big Mac index offers 7.3 hryvnias against dollar

According to the Big Mac index, U.S. dollar should cost just 7.3 hryvnias instead of 23.35.

Censor.NET reports citing The Economist referring to the updated Big Mac index.

Read more: Weakening of ruble to at least 90 against US dollar to inflict terminal damage on Russian economy, - Bloomberg

According to the newspaper, the Ukraine's currency exchange rate is undervalued by 68.7 percent.

As noted, the national currency of Ukraine ranks third among the undervalued currencies in the world. The first and the second places have been awarded to the Venezuelan bolivar and the Russian ruble.

If the average price of a Big Mac in America is $4.93, in Venezuela, in U.S. dollar terms, it costs $0.66. Consequently, the bolivar is undervalued by 86.5 percent, and one dollar should cost just 26.77 bolivars and not 198.7.

In Russia, Big Mac's price makes 114 rubles, or $1.53 versus $4.93 in the United States. Thus, it appears that the Russian ruble is undervalued by 69 percent, and $1 should cost three times as cheap as it is now - 23.1 rubles.

The top five of the most undervalued currencies also includes the South African rand and the Malaysian ringgit. The most overvalued currency turned out the Swiss franc (30.7 percent), Swedish krona (6.1 percent), and the Norwegian krone (5.8 percent).

Read more: Poroshenko vetoes law on foreign currency loan restructuring

The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their "correct" level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries.

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.

Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies.

индекс бигмак

 
 
 
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