Photo: Peter Chernov / RIA Novosti
The ruble remains the most undervalued currency against the dollar. To such conclusion the magazine the Economist, in his new edition of the “index big Mac”.
This figure takes into account the cost of the ingredients needed to create the Burger in different countries. In Russia, the big Mac costs 1,65 dollar, “reference” USA — 5.58 USD. According to economists ‘ calculations, the ruble thus was undervalued by 70 percent against the U.S. dollar. The most overvalued currency is the Swiss franc (+19%).
“Big Mac index” is calculated since 1986. It is based on the theory of purchasing power Parity (PPP), which says that currency must be adjusted as long as the price of an identical basket of goods — or in this case the sandwich doesn’t cost the same everywhere. The Economist claims that PPP is a poor predictor of exchange rates in the short term, however, clearly shows the long term is the undervalued currency “index big Mac” have tended to strengthen on average in the next ten years, and Vice versa.
In addition to the “index big Mac”, there are “latte index” and “index of Ukrainian borsch”, which is considered in two options — with meat or without.
Video, photo All from Russia.