The national currency is recognized as the most undervalued in 2015
The British magazine Economist has released the “index big Mac”, which showed that the hryvnia is one of the most undervalued national currencies. The index allows us to estimate the purchasing power of currencies, based on the value of the namesake hamburger at McDonald’s.
In previous years the Economist has identified the hryvnia most undervalued, but this time bypassed the ruble. However, the Russian media insist on infidelity calculations. Корреспондент.net tells details.
The hryvnia is undervalued
According to the rating, the value of the hryvnia is undervalued by 65.2 per cent, and its real exchange rate purchasing power should be 9.7 hryvnia per dollar.
The calculations are carried out: a big Mac in Ukraine is 54 hryvnia, which at the official rate (27.8 hryvnia to the dollar) is about 1.9 USD. In the US, this Burger from McDonald’s. worth as much as 5.58 USD.
That is, the rate of the national Bank the dollar is worth much more than when comparing price tags on the same goods, and thus the national currency is undervalued. Among all the national currency, the hryvnia is in the penultimate place.
Note that since 2015, the Ukrainian national currency took last place in the ranking.
Index The Big Mac 2019
In line with Economist estimates with 2019 for almost all world currencies are undervalued compared to the dollar.
Who nedoocenena, hryvnia or ruble?
The most undervalued currency was recognized as the ruble by 70 percent compared to the dollar. According to the Economist, in Russia, the big Mac costs 110 rubles or 1.65 USD. A year ago, in January 2018, the ruble was undervalued by 57 percent.
Russian media, in particular RBC, and Medusa, drew attention to the fact that log data differ from the official prices indicated on the website of McDonald’s the majority of regions of Russia – 130 rubles. This price is for Moscow, remained unchanged at least since 2016.
If you take a course that used a journal now, and count on it is the actual cost of big Mac in Russia, the underestimation would amount to 65.1 per cent. And then the most undervalued currency in the world will not be the ruble and the Ukrainian hryvnia.
The most overvalued currency
The calculation of the “index big Mac” leads the Economist since 1986. It is based on the fact that the list of ingredients to prepare a hamburger the same for all countries that have a McDonald’s restaurant chain.
In accordance with the theory of parity of purchasing power of currencies in ideal conditions on one and the same amount converted to another currency based on the exchange rate in any country of the world can buy the same amount of goods. Therefore, the difference in the cost of a big Mac shows the undervaluation of a currency.
The mere fact that, in accordance with the index big Mac currencies in many countries are more severe than on the basis of real exchange rates is not unusual.
In accordance with the index of the Economist, almost all the world’s currencies remain undervalued compared to the dollar.
The Argentine peso is undervalued by 64.1 per cent, the Turkish Lira 64.2 percent, and the yuan – by 45.3%. It is not only about developing countries: the pound is also undervalued compared to the dollar by 27 percent, and the yen – 35.5%.
According to the magazine over the past six months the dollar has been greatly strengthened compared to before high rate, for example by 35 percent against the Argentine peso and 14 percent to the Turkish Lira.
The most overvalued currency in the world is the Swiss franc. Compared to the dollars it is overvalued by 19 percent. In addition, revalued in accordance with the index also the Norwegian Krone and Swedish Krona.
Index The Big Mac 2019