The Economist names ruble most undervalued currency against dollar

The Economist names ruble most undervalued currency against dollar

Russia's ruble is the most undervalued currency against the U.S. dollar, according to The Economist magazine's Big Mac Index.

In January, a Big Mac costs 110 rubles ($1.65) in Russia, compared with $5.58 in America. That suggests the rouble is undervalued by 70% against the dollar. 

In Switzerland McDonald’s customers have to fork out SFr6.50 ($6.62), which implies that the Swiss franc is overvalued by 19%

The Big Mac index is based on the theory of purchasing-power parity, which states that currencies should adjust until the price of an identical basket of goods - or in this case, a Big Mac - costs the same everywhere. By this metric most exchange rates are well off the mark. 

According to the Economist's latest batch of data, almost every currency is undervalued against the dollar. The result is that the greenback itself looks stronger, relative to fundamentals, than at any point in three decades.

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