Another Big Mac

Even though we discussed the most recent Big Mac Index yesterday, this article caught our eye. As you will see, the article discusses how the valuation of the dollar has changed over the past several years based on the price of Big Macs. For example, the average value of a basket of foreign currencies against the U.S dollar was about neutral in 2009. Based on the recent Big Mac Index, foreign currencies are about 15 percent undervalued against the dollar now. Several currencies have had wild fluctuations, including the euro, which was as much as 50 percent overvalued in 2008 and is now about fair value, and the yen, which has gone from fair value to 24 percent undervalued.