The Economist has once again published its “Big Mac Index“. As some long-time readers may recall, this index is based on the theory of purchasing-power parity, in which exchange rates should equalize the price of a basket of goods across countries.
The index shows that the Big Mac that costs $3.58 in the U. S. would cost $6.16 in Switzerland and $6.87 in Norway. This suggests that their currencies are overvalued relative to the U. S. dollar. On the other end of the valuation spectrum, a Big Mac in China costs $1.83, suggesting that the yuan is 49% below its fair-value benchmark with the dollar.
source: The Economist. Click to enlarge.
