The Economist: Russian Ruble is the Most Undervalued Currency in the World
OREANDA-NEWS The ruble remains significantly undervalued compared to the dollar, writes the Economist on the basis of the new issue of the "Big Mac Index". The index allows you to estimate the purchasing power of the currency, based on the value of the hamburger Big Mac in the McDonald's network.
"Big Mac Index", which is calculated by The Economist since 1986, is based on the fact that the list of ingredients from which the traditional hamburger is made, is the same for all countries where there are restaurants of the network. According to the theory of purchasing power parity of currencies in ideal conditions, the same amount of goods can be bought in any country of the world for the same amount converted into another currency on the basis of the exchange rate. Thus, the difference in the value of the Big Mac in different countries will demonstrate the undervaluation of a currency.
According to the Economist, almost all of the world's currencies remain undervalued compared to the dollar. The Russian ruble remains in last place for this indicator: according to the newspaper, the ruble is undervalued by 70% compared to the dollar. In Russia, the Big Mac costs $1,65 (110 RUB.), while in the United States — $5,58 (373 RUB). A year ago, in January 2018, the ruble was undervalued by 57%.
The Economist data on the cost of the Big Mac in Russia differ from the official price listed on the website of McDonald's (130 rubles).
In the penultimate place in the ranking of the Economist is the Ukrainian hryvnia: it is underestimated by 65%. At the same time, the publication notes that almost all world currencies remain undervalued compared to the dollar, except for the Swiss franc, Norwegian and Swedish Krona. For example, the Swiss franc is the most overvalued world currency (by 18.7%), as in this country the Big Mac is worth 6.5 francs (6.7 dollars).