Big Mac Index says NZ currency is 'about right'

The latest edition of a popular exchange rate comparison measure shows New Zealand’s level is about right.

The Big Mac index has become a global standard since its invention by The Economist magazine in 1986.

It compares the price of a McDonald's Big Mac around the world and is based on the theory of purchasing-power parity (PPP).

This is the notion that in the long run exchange rates should move toward the rate that would equalise the prices of an identical basket of goods and services.

The latest version based on the US dollar show the cheapest Big Macs are in India and South Africa, implying their currencies are under-valued.

By contrast, the most expensive are in Norway, at 60% more than in the US, followed by Venezuela and Switzerland, where they are 52$ dearer.

New Zealand is 1.1% undervalued with The Economist pricing a $5.50 Big Mac here at $US4.57, slightly higher than the actual $US4.62.

The UK is the least over-valued currency at a disparity of just 0.1%. Australia is under-valued by 3.3%

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NZ Market Snapshot

Forex

Sym Price Change
USD 0.7845 0.0017 0.22%
AUD 0.8994 0.0002 0.02%
EUR 0.6203 0.0010 0.16%
GBP 0.4929 0.0003 0.06%
HKD 6.0847 0.0131 0.22%
JPY 84.0120 0.0180 0.02%

Commods

Commodity Price Change Time
Gold Index 1233.8 -1.760 2014-10-14T00:
Oil Brent 85.4 -4.470 2014-10-14T00:
Oil Nymex 81.2 -4.530 2014-10-14T00:
Silver Index 17.4 0.035 2014-10-14T00:

Indices

Symbol Open High Last %
NZX 50 5145.9 5168.7 5145.9 0.33%
NASDAQ 4246.2 4281.3 4213.6 0.32%
DAX 8765.4 8854.4 8812.4 0.15%
DJI 16321.9 16463.7 16321.1 -0.04%
FTSE 6366.2 6403.4 6366.2 0.42%
HKSE 23087.5 23230.3 23048.0 0.67%
NI225 15009.8 15044.3 14936.5 -0.13%