Bigmak index: in July, the hryvnia should be worth around 18.8 hryvnias
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As of July 2023, the hryvnia was undervalued by 49.5%, and therefore the dollar in Ukraine should be worth about 18.8 hryvnias.
This was shown in July research “Undervaluation of national currencies”, which is traditionally conducted several times a year by the British edition of The Economist.
At the time of the research, a “Big Mac” burger in the USA cost $5.58, while in Ukraine – UAH 105. As a result, in July 2023, the hryvnia was undervalued by 49.5%.
Accordingly, the hryvnia should be worth about UAH 18.8 per dollar, while the official dollar exchange rate in Ukraine is UAH 36.56.
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At the same time, if in January the Ukrainian currency was the fourth from the end, then in half a year the hryvnia climbed three places, occupying the seventh position. At the same time, the hryvnia overtook the following currencies:
- Philippine peso (undervalued by 49.4%)
- South African rand (49.7%),
- Egyptian pound (51.3%),
- Indian rupee (54.5%),
- Indonesian rupiah (54.8%),
- Taiwanese dollar (57.2%).
The study also shows overvalued currencies. There were seven of them in July 2023. It:
- Swiss franc (revalued by 38.5%);
- Norwegian krone (24%);
- Uruguayan peso (22.9%);
- Argentine peso (7.4%);
- euro currency (4.3%);
- Swedish krona (2.8%);
- Danish krone (1.3%).
We remind you:
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After the renewal of McDonald’s restaurants in Ukraine in the fall of 2022, for the first time since the beginning of the war, it became possible to calculate the “Bigmak index”, and therefore, to determine how much the hryvnia is really worth.
The “Big Mac Index” has been calculated by The Economist since 1986. According to the theory of purchasing power parity, with an adequate exchange rate, the same product will cost the same in different countries. In this way, it is possible to analyze how “correct” the exchange rates of national currencies are relative to the dollar.
The last Bigmak index for Ukraine before the war was published in February 2022. The study showed that the Ukrainian hryvnia is one of the most undervalued currencies in the world. And the real exchange rate of the hryvnia to the dollar should have been 12 hryvnias.
By the way, before McDonald’s left Russia, in January 2022, the Russian ruble was the most undervalued currency in the world.
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