![]() ![]() Yet, even with the Adjusted Index, the Big Mac remains the cheapest in Egypt. Therefore, the Economist included the ‘Adjusted Index’ in the Big Mac Index which it says “may be a better guide to the current fair value of a currency”. ![]() Nevertheless, the Raw index does not take into account aspects such as lower labor costs and other aspects that make up GDP. However, if properly valued, the exchange rate should be around $US 1 in exchange for EGP 5.43. At the time of calculations, $US 1 was equivalent to EGP 18.77. The Big Index is based on the theory of purchasing-power parity, which the Economist explains is “the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries”.Īccording to the Raw Index, which does not take into account the gross domestic production (GDP) per person, the Egyptian currency is undervalued by 71.1 percent. However, the Big Mac Index, which is described by the Economist as a “lighthearted guide to whether currencies are at their ‘correct’ level”, indicates the Egyptian pound is currently highly undervalued. ![]()
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