Confused about currencies? Think Big Macs

By Staff | July 23, 2015 | Last updated on July 23, 2015
1 min read

Exchange-rate theory. Currency misalignments. Purchasing-power parity. What’s it all mean?

The Economist’s Big Mac Index has long helped the currency challenged determine whether their hard-earned dollars are over- or undervalued. “[T]he average price of a Big Mac in America in July 2015 was $4.79; in China it was only $2.74 at market exchange rates. So the ‘raw’ Big Mac index says that the yuan was undervalued by 43% at that time.”

Click here for The Economist’s interactive graphic.

Also read:

Pros and cons of currency hedging

Currency is key to future of economy

5 international markets to watch

Advisor.ca staff

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.