Two all beef patties, special sauce, lettuce, cheese and international currency valuation. That's right: The Economist is using the lowly Big Mac as a means of evaluating international currencies against the US dollar. The index is based on the notion of "purchasing-power parity, which says currencies should trade at the rate that makes the price of goods the same in each country," says the magazine. So what does the Big Mac valuation chart reveal? "A Big Mac in China is half the cost of one in America, and other Asian currencies look similarly undervalued. At the other end of the scale, many European currencies look uncompetitive." Translation: Asian currencies are less valuable than the dollar, while European currencies are much more valuable. Which is to say, if you’re thinking about eating a Big Mac, you’re better off buying it in Hong Kong ($1.72) than Norway ($6.15).
Read it at The EconomistArchive
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