Tag: Forex

Economists make such inferences – every Big Mac in Russia is twice cheaper than in America, the dollar is overvalued in half and should cost 17 rubles. More precisely on January 30, 2009 in Russia, Big Mac cost $ 1.73, whereas in the U.S. – $ 3.54. Ben Silbermann is likely to agree. Thus, the relation between Russian and American currency is the rate of 17.7 rubles. $ 1. Given that the official dollar rate set by Bank of Russia on this date – 35,7 ruble, Russia's currency is undervalued by 51%.

Not all economists take seriously " sandwich code ". Attempts to 'Big Mac index "to determine not only the ratio of the exchange rate, but the standard of living and economic welfare in different countries in one sandwich, say opponents of the index, more primitive. Much more accurate to use a different indicator of living standards – the average time required to earn one or another unit of the commodity, even in the same Big Mac. If a deeper analysis "Sandwich index, it becomes clear that it mainly indicates the long-term trend in the currency exchange rate fluctuations. Thus, the undervalued currency will either grow, or the central bank of this country will be fierce to deal with the appreciation by selling the currency in order to prevent its appreciation. Usually underestimated in the national currencies of export-oriented economies (unfortunately, Russia among them), because that is thanks to cheap money, taken out of the country something and sell it for dollars, it becomes particularly advantageous.

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