FX.co ★ The Economist unveils fresh Big Mac index data

The Economist, a trustworthy weekly magazine, has published fresh data on the Big Mac index, one of the most contradictory economic indicators. Since 1986, economists have been examining the currency-comparison tool that is based on the theory of purchasing-power parity. Experts assess and predict the exchange rates in various countries by comparing the price of a Big Mac hamburger in different countries. According to the latest research, in Russia, Big Mac, which is available in every McDonald’s restaurant worldwide, costs $1.5 whereas in the US, its price is $5. It is obvious that the Russian currency is undervalued against the US dollar. Thus, the real price of the US dollar is slightly above 23 rubles.

There is an opinion that a Big Mac hamburger should have approximately the same price in all countries. Such a big gap can be explained by an imbalance between exchange rates. The Big Mac index showed that the Norwegian crown is the most overvalued currency. In Norway, the hamburger costs almost $8. Unfortunately, banks that set exchange rates ignore such information. At present, the USD/RUR pair is trading around 80 rubles.