Latest Big Mac Index

makes sense if you compare these prices with the average income in these countries, though from what i know a big mac is not exactly cheap at 2.57$ in egypt

just to understand: india is lowest in this list, it means indian rupee is depreciated right?

zizzle wrote:makes sense if you compare these prices with the average income in these countries, though from what i know a big mac is not exactly cheap at 2.57$ in egypt

well id live like a king in egypt if had my jordan salary there

I think using a bag of rice/potatoes or any other carbs unti would be better than using a big mac as a metric

diptiman wrote: just to understand: india is lowest in this list, it means indian rupee is depreciated right?

Pakistan rupee is worse then India.... however because there are more people in india and many of them poor they are targeting them...

diptiman wrote: just to understand: india is lowest in this list, it means indian rupee is depreciated right?

Okay, 2 points.

1. You got your words confused. Depreciate means that the currency is losing value. It's an action. The word you're looking for is undervalued. Likewise appreciate means gain value, whereas if it were too strong that would be overvalued.

2. It doesn't necessarily mean that. The way the Big Mac index works is that it takes into account traded goods, whose prices are the same in the whole world (commodities: meat, lettuce, tomatoes, etc) and non-traded goods whose prices are determined country by country (labor & land). So cheaper burgers could just mean that the cost of labor in India is cheap therefore you have cheaper burgers. It's more of an assessment of purchasing power parity. In order to make that assessment you need to adjust to GDP per capita, in something like the graph below. Both China and India seem undervalued, but when adjusted for GDP they're only barely. Argentina and Brazil, on the other hand, is living well beyond their ability and in the long run should depreciate.

It is still cheaper, and that has to be due to the recent depreciation of the Rupee. If the rupee starts appreciating, the red dot will move towards the line and may cross it.