The Economist has updated their “Big Mac Index”. The index is a creative way of showing vales of goods and services across the globe. The study is performed annually and is intended to visually represent Purchasing Power Parity (PPP) – the idea that long run exchange rates will normalize towards equal prices for a like basket of goods and services. This is a very slow process. Comparing the average price of a Big Mac in the United States, currently $4.79, to the price in USD in foreign nations, you can see the best place to buy a burger is in Ukraine, followed by Russia. Switzerland, on the other end of the spectrum, does not provide a good deal. We are in the midst of a global race to devalue local currencies. The dollar has strengthened significantly against other currencies in 2014, as central banks continue to loosen monetary policy and pump money into their economy.
January 26, 2015