Experts of the British “Economist” magazine have concluded that the Russian ruble is one of the most undervalued currencies in the world, following new data from the Big Mac index.
This indicator is used to determine the purchasing power parity of different countries based on the cost of a single “burger”.
The British Journal has been making these calculations since 1986, assuming that the cost of a sandwich made of different ingredients—bread, cheese, meat and vegetables—could serve as a global alternative to a basket of goods that differed from country to country.
Moreover, given the presence of the McDonald’s fast-food chain in most countries of the world, the “Big Mac Index”, according to the magazine, allows for a more equitable ratio between coins and the US dollar. At the same time, when analyzing this indicator, it is assumed that the same goods have the same price in all countries.
Therefore, the magazine believes that the ruble against the US dollar for July 2021 is undervalued by 59.9%, since one Big Mac in Russia costs 169 rubles, and not 5.65 dollars, as in the United States. To equalize the cost, the dollar exchange rate, according to economists, should be 29.91 rubles, while now it is 74.5 rubles.
Experts observe that with the methodology used, the world’s currencies are undervalued, with the exception of the Venezuelan bolivar, the Swiss franc, as well as the Norwegian and Swedish krona, while the value of the euro, the pound sterling, the Japanese yen and the Chinese yuan against the dollar is undervalued by 11.1% and 15.9 %, 37.2% and 38.8%, respectively.
As for the exchange rates of the Ukrainian hryvnia and the Azerbaijani manat, the magazine confirms, they are undervalued by 57.7% and 58.9%.