Big Mac Index
The Economist’s Big Mac Index 7/22/10 Big Mac Prices valued at today’s exchange rates |
Country | Big Mac Price | Implied PPP rate + | Today’s Exchange Rate 1 USD = |
Over(+) / Under(-) Valuation against the USD, % ++ | |
in Local Currency | in US dollars | ||||
United States | $ 3.73 | 3.7300 | — | 1.0000 | — |
Argentina | Peso 14 | 3.4960 | 3.75 | 4.0046 | -6.3577 |
Australia | A$ 4.35 | 4.0711 | 1.17 | 1.0685 | 9.4993 |
Brazil | Real 8.71 | 4.9610 | 2.33 | 1.7557 | 32.7106 |
Britain | £ 2.29 | 3.5787 | 0.61 | 0.6399 | -4.6726 |
Canada | C$ 4.17 | 4.0341 | 1.12 | 1.0337 | 8.3487 |
Chile | Peso 1750 | 3.4364 | 469 | 509.250 | -7.9038 |
China | Yuan 13.2 | 1.9594 | 3.54 | 6.7369 | -47.4536 |
Colombia | Peso 8200 | 4.4167 | 2196 | 1856.60 | 18.2807 |
Costa Rica | Colones 2000 | 3.8977 | 536 | 513.120 | 4.4590 |
Czech Republic | Koruna 67.6 | 3.5688 | 18.1 | 18.9417 | -4.4436 |
Denmark | DK 28.5 | 4.9900 | 7.63 | 5.7114 | 33.5925 |
Eygpt | Pound 13 | 2.2249 | 3.48 | 5.8429 | -40.4405 |
Estonia | Kroon 32 | 2.6161 | 8.57 | 12.2320 | -29.9379 |
Euro area | € 3.38 | 4.4097 | 0.91 | 0.7665 | 18.7215 |
Hong Kong | HK$ 14.8 | 1.9055 | 3.96 | 7.7670 | -49.0151 |
Hungary | Forint 740 | 3.4143 | 198 | 216.738 | -8.6455 |
Indonesia | Rupiah 22780 | 2.5058 | 6102 | 9090.91 | -32.8780 |
Israel | Shekel 14.9 | 3.9924 | 3.99 | 3.7321 | 6.9103 |
Japan | ¥ 320 | 3.7251 | 85.7 | 85.9031 | -0.2364 |
Latvia | Lats 1.55 | 2.8115 | 0.42 | 0.5513 | -23.8164 |
Lithuania | Litas 7.3 | 2.7169 | 1.96 | 2.6869 | -27.0535 |
Malaysia | Ringgit 7.05 | 2.2339 | 1.89 | 3.1559 | -40.1122 |
Mexico | Peso 32 | 2.4966 | 8.57 | 12.8173 | -33.1372 |
New Zealand | NZ$ 5 | 3.6261 | 1.34 | 1.3789 | -2.8211 |
Norway | Kroner 45 | 7.3490 | 12.1 | 6.1233 | 97.6059 |
Pakistan | Rupee 210 | 2.4064 | 56.30 | 87.2660 | -35.4846 |
Peru | New Sol 10 | 3.4944 | 2.68 | 2.8617 | -6.3494 |
Philippines | Peso 102 | 2.2978 | 27.3 | 44.3900 | -38.4997 |
Poland | Zloty 8.3 | 2.7182 | 2.22 | 3.0535 | -27.2965 |
Russia | Rouble 71 | 2.2313 | 19.0 | 31.8200 | -40.2891 |
Saudi Arabia | Riyal 10 | 2.6592 | 2.68 | 3.7605 | -28.7329 |
Singapore | S$ 4.23 | 3.1652 | 1.13 | 1.3364 | -15.4445 |
South Africa | Rand 18.5 | 2.5720 | 4.94 | 7.1929 | -31.3212 |
South Korea | Won 3400 | 2.8788 | 911 | 1181.06 | -22.8659 |
Sri Lanka | Rupee 210 | 1.8165 | 56.3 | 115.610 | -51.3018 |
Sweden | SKr 48.4 | 6.8400 | 13.0 | 7.0760 | 83.7196 |
Switzerland | SFr 6.5 | 6.4331 | 1.74 | 1.0104 | 72.2090 |
Taiwan | NT$ 75 | 2.3632 | 20.1 | 31.7370 | -36.6670 |
Thailand | Baht 70 | 2.2403 | 18.8 | 31.2459 | -39.8321 |
Turkey | Lire 5.95 | 3.9672 | 1.59 | 1.4998 | 6.0141 |
UAE | Dirhams 11 | 2.9940 | 2.95 | 3.6740 | -19.7060 |
Ukraine | Hryvnia 14.5 | 1.7979 | 3.88 | 8.0650 | -51.8909 |
Uruguay | Peso 79 | 3.7356 | 21.1 | 21.1480 | -0.2270 |
+ The Purchasing Power Parity (PPP) rate is the local Big Mac price divided by its price in the United States. Prices and their corresponding implied PPP rates are the latest figures available from The Economist.
What is the Big Mac Index?
The Economist uses the price of the ubiquitous McDonald’s meal to calculate the “Big Mac Index”, a guide showing how far from fair value different world currencies are. The Big Mac theory (a.k.a. purchasing-power parity, or PPP) says that exchange rates should even out the prices of Big Macs sold across the world.
The implied PPP shown in the table is the exchange rate that would make a Big Mac cost the same abroad as it does in the USA. When you compare actual exchange rates with the implied PPP rate, you will see that most currencies are trading way above or below the US dollar, meaning that they are over- or undervalued. Keep in mind that PPP is a long-term indicator, pointing to where currencies ought to go in the future. (It’s also best to use it only to measure currencies between countries that are at a similar stage of development.)
Tags: Big Mac Index, Currency Valuations, fair value, Overvalued or undervalued vs. Dollar