The Ukrainian currency is undervalued by 49.5% compared to the actual exchange rate of 41.05 UAH/dollar, according to the updated Big Mac Index for July 2024, published by The Economist .
According to the data, a Big Mac in Ukraine costs 118 hryvnias, while in the United States its price is 5.69 dollars. This indicates that the Ukrainian currency is undervalued by 49.5% compared to the actual exchange rate of 41.05 UAH/dollar. According to purchasing power parity, the exchange rate should be at 20.74 UAH/dollar.
The most undervalued currencies also include those of Taiwan, Indonesia, Egypt, India, South Africa, the Philippines, and Malaysia, the list of which has not changed since January 2024.
At the same time, the most overvalued currencies are the Swiss franc (by 41.8%), the Uruguayan peso (by 24.3%), the Norwegian krone (by 18.9%), the Argentine peso (by 15.0%), the euro (by 6.5%), and the British pound (by 3.6%).
What is the Big Mac Index?
The Big Mac Index was created by The Economist in 1986. The index's methodology is based on the theory of purchasing power parity (PPP), which states that an exchange rate should equalize the cost of a basket of goods (in this case, a burger) across countries.
In July 2022, The Economist was unable to estimate the hryvnia-dollar exchange rate in the Big Mac Index because McDonald's temporarily closed its restaurants in Ukraine due to the Russian invasion. The chain's establishments later began to resume operations.
The Russian ruble is absent from the index due to McDonald's leaving the Russian market.
