The mid-year update for the Big Mac Index has dropped, showing what the ‘real’ value of the rand should be based on South Africa’s purchasing power – and why we’re not quite there.
The Economist has done its mid-year update to its Big Mac Index for 2024, showing how the local unit has made gains against the dollar this year—although it remains one of the most undervalued currencies in the world.
According to The Economist, ‘Burgernomics’ was never intended to be a precise gauge of currency misalignment but merely a tool to make exchange-rate theory more digestible. The only currencies more undervalued by this measure are the Taiwanese dollar , the Indonesian rupiah , the Egyptian pound and the Indian rupee .One of the Big Mac index’s biggest flaws is that it doesn’t consider the full picture when evaluating currency differences.
In PPP terms, a Big Mac costs 49.9% less in South Africa than in the United States at market exchange rates.
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