Big Mac Index Reveals Argentina's Overvalued Currency: Findings by The Economist

2023-08-09 12:12:00

The index Big Mac of this month prepared by The Economist left an important revelation: Argentina is the second most expensive country in Latin America to buy the famous hamburger and is behind Uruguay. That is, the country has the second most overvalued currency in the world against the dollar.

The Big Mac index has been published by The Economist since 1986 and is a simplified indicator of a country’s purchasing power, since it is calculated by comparing the prices of a hamburger Big Mac in a large number of nations. To make the comparison, the Big Mac hamburger is used, which is one of the main products of McDonald’sbecause it is available in almost all countries and is manufactured in standard size, composition and quality.

As reported by the magazine, the The world’s most undervalued currency relative to the US dollar is the New Taiwan dollarwith 57.2%, making Taiwanese the population with the lowest purchasing power in the world.

Dollar Dollar 2022 dollars Pesos Bills

Mariano Fuchila

The ranking estimated that Uruguay is the most expensive country to obtain a Big Mac, followed by Argentina and Costa Rica. This reveals that the Argentine peso is 7.4% overvalued against the US dollar.

A Big Mac costs $1,650 pesos in Argentina and $5.58 in the United States. The implicit exchange rate is $295.70. The difference between this and the real exchange rate, 275.27, suggests that the Argentine peso is 7.4% overvalued. However, it is important to clarify that this survey does not take the Dolar blue but the official dollar.

Other of the most overvalued coins They are the Swiss franc with 38.5%, the Norwegian krone with 24%, the euro with 4.3%, the Swiss krone with 2.8% and the Danish krone with 1.3%.

On the contrary, the most devalued currencies are Guatemala (34%), Peru (25.9%), Honduras (25.8%), Nicaragua (22%) and Chile (16.7%).. Likewise, the Colombian peso registered an undervaluation of 12.8 percent.