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%


Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.6617 0.0000 0.00%
AUD 0.9312 0.0000 0.00%
EUR 0.5883 0.0000 0.00%
GBP 0.4560 0.0000 0.00%
HKD 5.1599 0.0000 0.00%
JPY 74.9170 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1237.4 -9.140 2016-02-12T00:
Oil Brent 34.0 -0.490 2016-02-12T00:
Oil Nymex 31.9 3.190 2016-02-12T00:
Silver Index 15.8 0.000 2016-02-12T00:

Indices

Symbol Open High Last %
NZX 50 5987.0 5987.0 5987.0 -0.89%
NASDAQ 4307.3 4340.1 4266.8 1.66%
DAX 8854.4 8967.5 8752.9 2.45%
DJI 15691.6 15974.0 15660.2 2.00%
FTSE 5537.0 5707.6 5537.0 3.08%
HKSE 18278.8 18482.3 18545.8 -1.22%
NI225 15426.3 15437.2 15713.4 -4.84%