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Big Mac Index of Currency Valuation Fairness 2010 - Country Rankings
http://www.geographic.org/country_ranks/big_mac_index_currency_undervaluation_2010_country_rankings.html
SOURCE: McDonald's Corporation and The Economist.
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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.

See explanation in the Notes below the table.

Deviation of Currencies from their Fair Value
Shown on the Basis of July 22nd, 2010 Big Mac Prices




Rank
--------


Country
-----------------------

Big Mac
Price US $
----------------

Implied
PPP rate 1
-----------------
Under(-)/Over(+)
Valuation vs.
the USD, % 2
------------------------
1 Ukraine 1.86 3.88 -50.3233
2 Sri Lanka 1.88 56.3 -49.6476
3 Hong Kong 1.91 3.96 -48.9710
4 China 1.98 3.54 -46.9074
5 Egypt 2.24 3.48 -39.9441
6 Malaysia 2.28 1.89 -38.9555
7 Russia 2.34 19.0 -37.2730
8 Thailand 2.34 18.8 -37.2080
9 Philippines 2.36 27.3 -36.7156
10 Taiwan 2.45 20.1 -34.3566
11 Pakistan 2.45 56.30 -34.3494
12 Indonesia 2.56 6102 -31.4745
13 Mexico 2.60 8.57 -30.4270
14 South Africa 2.67 4.94 -28.5725
15 Saudi Arabia 2.67 2.68 -28.5486
16 Estonia 2.86 8.57 -23.2890
17 Poland 2.95 2.22 -21.1143
18 Lithuania 2.96 1.96 -20.4707
19 UAE 2.99 2.95 -19.6951
20 South Korea 3.04 911 -18.4379
21 Latvia 3.06 0.42 -17.1434
22 Singapore 3.27 1.13 -12.5793
23 Argentina 3.54 3.75 -5.1929
24 Britain 3.60 0.61 -3.9824
25 Peru 3.60 2.68 -3.4999
26 Chile 3.61 469 -3.2273
27 United States 3.73 --- ---
28 New Zealand 3.77 1.34 0.9568
29 Hungary 3.79 198 1.2824
30 Czech Republic 3.86 18.1 3.2533
31 Uruguay 3.93 21.1 5.0755
32 Japan 3.97 85.7 6.1880
33 Costa Rica 3.98 536 6.7923
34 Canada 4.09 1.12 9.8793
35 Israel 4.12 3.99 10.4590
36 Turkey 4.20 1.59 12.2247
37 Australia 4.32 1.17 16.2791
38 Colombia 4.54 2196 21.6250
39 Euro area 4.74 0.91 27.5224
40 Brazil 5.10 2.33 36.4009
41 Denmark 5.35 7.63 43.3537
42 Switzerland 6.70 1.74 79.2706
43 Sweden 7.37 13.0 97.8811
44 Norway 7.79 12.1 109.5819

NOTE 1:

The Purchasing Power Parity (PPP) rate is the local Big Mac price divided by its price in the United States.

NOTE 2:

The Over/Under valuation against the dollar is calculated as follows using OANDA's currency exchange rates: 100 x (PPP - Exchange Rate) / Exchange Rate.

NOTES:

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.)

How to read this table

If a Big Mac costs 3.38 in countries that use the euro and $3.73 in the US, then the implied PPP rate is 3.38/3.73 = 0.91. If the actual exchange rate for the euro is lower that the implied PPP rate, the Big Mac theory suggests that the value of the euro might go up until it reaches the implied PPP rate. If the actual exchange rate is higher, then you might expect the euro to go down until it hits the implied PPP rate. The percentage of under- and over-valuation from the current exchange rate is shown in the table.







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This page was last modified 20-MAY-10
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