New Economist Big Mac Index Says Yuan Is Almost At Correct Value Against The Dollar

The Economist uses the Big Mac Index to see if currencies are at the right level. Its based on this theory called purchasing-power parity- the idea that over time exchange rates should move towards the rate that would equalise the prices of a basket of goods and services around the world.

In this edition of the Big Mac Index, they’ve found that a Chinese Big Mac is 44% cheaper than an American one. That’s natural, as China is poorer than the U.S.. In fact, The Economist thinks that’s about where it should be.

Also, the chart below shows us that there’s a strong relationship between the price of a Big Mac and a country’s GDP per person. Below this chart, check out their currency ranking on both the raw and adjusted index.


Photo: The Economist

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