The Big Mac Index

The Big Mac index was invented by The Economist in 1986 as an easy to understand guide to whether currencies are at the “right” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. The following graph shows the over- and underrated currencies of the world:

big-mac2

read more: The Economist

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