{"id":1478806,"date":"2024-07-23T06:45:00","date_gmt":"2024-07-23T10:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1478806"},"modified":"2024-07-23T06:45:00","modified_gmt":"2024-07-23T10:45:00","slug":"swiss-big-macs-are-44-more-expensive-than-in-america","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/swiss-big-macs-are-44-more-expensive-than-in-america\/1478806\/","title":{"rendered":"Swiss ‘Big Macs’ Are 44% More Expensive Than In America"},"content":{"rendered":"

Swiss ‘Big Macs’ Are 44% More Expensive Than In America<\/span><\/p>\n

\n

What can a Big Mac tell us about currency rates? As it turns out, quite a lot.<\/strong><\/em><\/p>\n

The\u00a0Big Mac Index<\/a>, created by The Economist in 1986, started out as a simple tool to make currency theory more digestible. Now, it\u2019s a widely-known measure in popular economics to assess and compare currency valuations.<\/p>\n

In short, the Big Mac index compares the purchasing power parity (PPP) of currencies using the price of a Big Mac in the U.S. as the benchmark. It shows how much a Big Mac costs in various countries compared to the U.S., but it also works as a way to assess exchange rates.<\/strong><\/p>\n

In this graphic, Visual Capitalist’s Kayla Zhu visualizes<\/a> the price of a McDonald\u2019s Big Mac in U.S. dollars between 13 different countries around the world, the eurozone, and the United States, using the latest January 2024 data from The Economist\u2019s Big Mac Index\u00a0dataset<\/a>.<\/p>\n

<\/a><\/p>\n

Calculating the Big Mac Index to Assess Currencies<\/h2>\n

One can use the price of Big Macs in other countries to see if a currency has more or less purchasing power than expected. This is done by taking the local price of a Big Mac (in local currency) and dividing it by the U.S. price of a Big Mac to calculate an implied exchange rate.<\/p>\n

This implied exchange rate is then compared against the actual exchange rate between the two currencies; if the implied rate is higher than the actual rate, the local currency is \u201covervalued\u201d, and if it is lower, the local currency is \u201cundervalued\u201d.<\/p>\n

It\u2019s worth noting that this measure is relatively simplistic and doesn\u2019t account for some factors like taxes, local production costs, and market barriers.<\/p>\n

The Big Mac Index<\/h2>\n

Switzerland has the most expensive Big Macs in the world at $8.17 USD, which is 44% more expensive than the price of a Big Mac in the United States. Using the Big Mac Index, that suggests that the Swiss franc is 44% overvalued against the U.S. dollar.<\/p>\n

CountryPrice of Big Mac in USDBig Mac Index (USD)
\n\ud83c\udde8\ud83c\udded Switzerland$8.1743.53%
\n\ud83c\uddf3\ud83c\uddf4 Norway$7.1425.47%
\n\ud83c\uddfa\ud83c\uddfe Uruguay$7.0423.72%
\n\ud83c\uddea\ud83c\uddfa Euro area$5.873.12%
\n\ud83c\uddf8\ud83c\uddea Sweden$5.873.08%
\n\ud83c\udde8\ud83c\uddf7 Costa Rica$5.710.39%
\n\ud83c\uddec\ud83c\udde7 Britain$5.710.36%
\n\ud83c\udde9\ud83c\uddf0 Denmark$5.690.03%
\n\ud83c\uddfa\ud83c\uddf8 United States$5.690.00%
\n\ud83c\uddf1\ud83c\uddf0 Sri Lanka$5.69-0.03%
\n\ud83c\udde8\ud83c\udde6 Canada$5.56-2.37%
\n\ud83c\uddf2\ud83c\uddfd Mexico$5.19-8.74%
\n\ud83c\udde8\ud83c\uddf4 Colombia$5.09-10.60%
\n\ud83c\udde6\ud83c\uddfa Australia$5.07-10.82%
\n\ud83c\uddf8\ud83c\udde6 Saudi Arabia$5.07-10.97%
\n\ud83c\uddf3\ud83c\uddff New Zealand$5.01-12.03%
\n\ud83c\uddf5\ud83c\uddf1 Poland$4.97-12.74%
\n\ud83c\uddf8\ud83c\uddec Singapore$4.96-12.88%
\n\ud83c\uddfb\ud83c\uddea Venezuela$4.93-13.28%
\n\ud83c\udde6\ud83c\uddea United Arab Emirates$4.90-13.87%
\n\ud83c\udde7\ud83c\uddf7 Brazil$4.81-15.48%
\n\ud83c\uddf1\ud83c\udde7 Lebanon$4.80-15.56%
\n\ud83c\udde8\ud83c\uddff Czech Republic$4.61-18.97%
\n\ud83c\uddf0\ud83c\uddfc Kuwait$4.55-20.05%
\n\ud83c\uddee\ud83c\uddf1 Israel$4.52-20.63%
\n\ud83c\udde7\ud83c\udded Bahrain$4.51-20.74%
\n\ud83c\udde8\ud83c\uddf1 Chile$4.46-21.68%
\n\ud83c\uddf3\ud83c\uddee Nicaragua$4.34-23.70%
\n\ud83c\uddf5\ud83c\uddea Peru$4.25-25.32%
\n\ud83c\udded\ud83c\uddf3 Honduras$4.13-27.37%
\n\ud83c\uddf0\ud83c\uddf7 South Korea$4.11-27.81%
\n\ud83c\udded\ud83c\uddfa Hungary$3.98-30.11%
\n\ud83c\uddf9\ud83c\uddf7 Turkey$3.97-30.29%
\n\ud83c\uddf6\ud83c\udde6 Qatar$3.85-32.42%
\n\ud83c\udde6\ud83c\uddf7 Argentina$3.83-32.61%
\n\ud83c\uddf5\ud83c\uddf0 Pakistan$3.81-33.09%
\n\ud83c\uddf9\ud83c\udded Thailand$3.78-33.50%
\n\ud83c\uddec\ud83c\uddf9 Guatemala$3.71-34.78%
\n\ud83c\uddf4\ud83c\uddf2 Oman$3.69-35.18%
\n\ud83c\uddf2\ud83c\udde9 Moldova$3.56-37.45%
\n\ud83c\uddef\ud83c\uddf4 Jordan$3.53-38.03%
\n\ud83c\udde6\ud83c\uddff Azerbaijan$3.49-38.58%
\n\ud83c\udde8\ud83c\uddf3 China$3.47-38.99%
\n\ud83c\uddf7\ud83c\uddf4 Romania$3.42-39.85%
\n\ud83c\uddef\ud83c\uddf5 Japan$3.04-46.51%
\n\ud83c\uddfb\ud83c\uddf3 Vietnam$3.01-47.06%
\n\ud83c\udded\ud83c\uddf0 Hong Kong$2.94-48.30%
\n\ud83c\uddfa\ud83c\udde6 Ukraine$2.94-48.37%
\n\ud83c\uddf5\ud83c\udded Philippines$2.86-49.74%
\n\ud83c\uddf2\ud83c\uddfe Malaysia$2.78-51.10%
\n\ud83c\uddea\ud83c\uddec Egypt$2.75-51.66%
\n\ud83c\uddff\ud83c\udde6 South Africa$2.71-52.46%
\n\ud83c\uddee\ud83c\uddf3 India$2.59-54.51%
\n\ud83c\uddee\ud83c\udde9 Indonesia$2.43-57.29%
\n\ud83c\uddf9\ud83c\uddfc Taiwan$2.39-57.95%<\/p>\n

European countries like Switzerland, Norway, and those in the eurozone tend to have more expensive Big Macs than the United States. This indicates that these European currencies may be overvalued relative to the U.S. dollar.<\/p>\n

On the other end of the spectrum, several major East Asian economies, including Taiwan, Japan, China, and South Korea, have currencies substantially undervalued against the U.S. dollar, according to the Big Mac Index.<\/p>\n

In April, the\u00a0Bank of America<\/a>\u00a0stated it was not bullish \u201con any currency in Asia\u201d and mentioned the Chinese yuan, South Korean won, and Taiwan dollar under its bearish category. In June, the Japanese yen hit a\u00a038-year low<\/a>\u00a0against the dollar.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 07\/23\/2024 – 02:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/personal-finance\/swiss-big-macs-are-44-more-expensive-america<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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