For more than thirty-five years, the British magazine
The Economist has
confronted exchange rates between currencies with the reality of the purchasing power they grant, thanks to its Big Mac index.
The flagship product of the multinational McDonald's allows it to compare the costs of the same item across the planet.
The July 2022 edition confirms the strength of the dollar.
According to the Big Mac Index, almost all currencies are undervalued against the greenback.
The calculation of the raw index results in an exchange rate against the European currency of 1.11 dollars for one euro.
But the index adjusted according to the weights of the respective GDPs, which takes into account the production costs of the burger, results in parity between the greenback and the single currency, which is the rate at which they have been trading for a few days.
This means that, when 1 dollar equals 1 euro, the Big Mac is 11% more expensive across the Atlantic, an additional cost justified by the greater wealth of the United States compared to Europe, according to
The Economist
.
Among countries with higher purchasing power in local currency compared to the United States, the Big Mac is 14% cheaper in the United Kingdom, thanks to the weakness of the pound sterling, and 45% cheaper in Japan, as a result of the level of the yen, which has plummeted in recent months.
Finally, little consolation for Venezuelans in the major economic crisis they have been experiencing for years, they can afford a Big Mac two thirds cheaper than in the United States.
Conversely, the Swiss (+ 30%), Norwegians (+ 22%), Swedes (+ 8%) or Canadians (+ 2%) pay more for their hamburger than the Americans, which reflects the overvaluation of their currencies respective against the greenback.