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%
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Gareth Morgan's sizeable donations to his own party revealed
- Kiwi business traveller stranded in San Francisco after United de-planes his wallet and passport
- Budget 2017: What's been announced so far, what's tipped for today
- SeaDragon confirms full-year loss will widen
- Chorus increases bank facility, pushes out maturity date for increased flexibility, certainty
Most listened to
- David Seymour gives Gareth Morgan a serve as the latest political party donations are disclosed
- Those pre-budget announcements aren’t as big as they look. Joyce still has lots of fiscal room, says Rob Hosking
- Tony Falkenstein claims to have NZX shareholder support for his bid to become a director
- Pacific Edge CEO David Darling on progress with key US customers
- NBR Radio: best of the week ended May 19, with Grant Walker