The Economist: ruble is the most undervalued currency

The Economist: ruble is the most undervalued currency

The Russian ruble is the most undervalued currency, according to the latest Economist 'Big Mac Index' currency comparison of McDonald's Big Mac prices across the world.

While a Big Mac in the U.S. in January 2021 costs $5.66, in Russia it is priced at 135 rubles, the equivalent of $1.81 according to the current exchange rate of 74 rubles for one dollar. The Big Mac price indicates that this exchange rate undervalues the ruble by 68%, and that one dollar should be worth 23.85 rubles.

The Hong Kong dollar (46.8%) and Turkish Lira (39.7%) are other most undervalued currencies.

The Big Mac index began in 1986 as a way of testing whether currencies are at their correct level, according to their purchasing-power parity (PPP), an economic theory which holds that exchange rates should be moving towards eventual global price parity in the future. In that ideal case, an identical basket of goods and services will be the same in any two countries.