The Economist has published its Big Mac Index for 2022, showing how the rand continues to be one of the most undervalued currencies globally, relative to the US dollar.
The Big Mac Index is an initiative created by The Economist that aims to measure whether currencies are priced at their “correct” level.
According to The Economist, ‘Burgernomics’ was never intended as a precise gauge of currency misalignment, but is merely a tool to make exchange-rate theory more digestible. “It is worth pointing out that it is common for poor countries to seem cheap relative to rich ones in any simple comparison of prices,” The Economist said, noting that in most countries, “the price of a burger is about what you would expect given the country’s GDP per person”.
However, currency value isn’t determined objectively and may be undervalued due to a lack of demand, even if a country’s economy is strong.
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