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 0.7831 -0.0010 -0.13%
AUD 0.9224 0.0005 0.05%
EUR 0.6286 -0.0005 -0.08%
GBP 0.5013 0.0005 0.10%
HKD 6.0818 -0.0073 -0.12%
JPY 92.8970 -0.0030 -0.00%

Commods

Commodity Price Change Time
Gold Index 1167.0 -29.600 2014-11-28T00:
Oil Brent 79.4 -0.640 2014-11-26T00:
Oil Nymex 66.2 -7.540 2014-11-28T00:
Silver Index 15.5 -1.060 2014-11-28T00:

Indices

Symbol Open High Last %
NZX 50 5455.4 5474.7 5455.4 -0.57%
NASDAQ 4797.1 4810.9 4787.3 0.09%
DAX 9990.7 9990.7 9974.9 0.06%
DJI 17830.6 17893.4 17827.8 0.00%
FTSE 6723.4 6734.7 6723.4 -0.01%
HKSE 23982.3 24117.2 24004.3 -0.07%
NI225 17340.2 17471.9 17248.5 1.23%