According to the publication, this makes the rand the most underpriced major currency in the world and puts it in a worse position than the Russian rouble and the Turkish lira, which are both undervalued by 61%.
Since 1986, The Economist has been using McDonald’s Big Mac burger prices – “burgernomics” – to determine whether currencies are overvalued or too cheap.It says that in the long run, exchange rates ought to adjust so that an identical product – in this case a Big Mac burger – should cost the same across countries.
The Economist says the Big Mac Index has become a global standard, which is featured in economic textbooks and dozens of academic studies. The latest Big Mac Index shows that most currencies lost ground against the dollar in the past six months.The euro , the Australian dollar and the UK pound are all undervalued.
A decade ago, the rand was trading at R8.28 to the dollar and the Big Mac index found that it was “only” undervalued by 39% against the dollar.If it were to trade in line with Big Mac parity, it would be at R5.50 per dollar.According to The Economist, an analysis of data going back to 1986 shows that currencies deemed undervalued by the Big Mac Index tend to strengthen, on average, in the subsequent 10 years.
tito_mboweni PresidencyZA CyrilRamaphosa GovernmentZA SAgovnews redgenkosi BuddyWells1 BDliveSA businessinsider SACCIza BusinessLiveSA BusinessUnitySA _cosatu FEDUSAMedia SAFTU_media SABCNewsOnline SAfmRadio MotsepeFoundtn GlblCtzn
MandiNyathi 62% recovery asap then. people better move all assets back home, else I'll obliterate their diversified portfolios
MandiNyathi Yes. Lets do a Rand Rally, Target suggestions for tonight?
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