Russian ruble remains one of the world’s most undervalued currencies – Big Mac Index

The Russian ruble is once again one of the most undervalued currencies in the world, according to the Big Mac Index, published by The Economist.
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The Russian ruble is once again one of the most undervalued currencies in the world, according to the Big Mac Index, published by The Economist.

The rating is based on the buying power of global currencies according to the price of a McDonald’s Big Mac burger in different countries.

While the Big Mac costs $5.65 in the United States, in Russia the same burger costs only 169 rubles, or $2.27. According to these figures, the fair exchange of the Russian currency should be 29.91 rubles per one dollar. However, based on the current exchange of 73.65 rubles per dollar, the Russian currency is undervalued by nearly 60%.

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According to the index, the ruble is the second most undervalued currency behind the Lebanese pound, which is undervalued by nearly 70.2%. The list also includes the euro (undervalued by 11.1%) and the British pound (15.9%).

This is not the first time the ruble has featured in the Big Mac Index’s top undervalued currencies, having held a similar position in the ranking in January 2021, as well as in January and July last year.

The list also includes overvalued currencies such as the Venezuelan bolívar (overvalued by 47.7%), the Swiss franc (24.7%), as well as the Norwegian and Swedish krona (11.5% and 9.6%, respectively).

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The Big Mac Index has been calculated since 1986 and is published twice a year. It’s based on the theory of purchasing power parity (PPP) of a currency, which assumes that, in the long term, the exchange rate should equalize the general value of a basket of goods and services in different countries.

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