The Big Mac Index, a unique economic indicator developed by The Economist, reveals that as of January 2024, Ukraine’s hryvnia is among the world’s most undervalued currencies. In Ukraine, a Big Mac burger costs 110 UAH ($2.91 USD), significantly less than its price of $5.69 in the United States, indicating that the hryvnia is undervalued by 48.4 percent against the U.S. dollar.
According to the index, the hryvnia’s true value should be closer to 19.33 UAH per dollar, rather than the official exchange rate of approximately 38 UAH per dollar. This discrepancy places the Ukrainian currency eighth in the ranking of the world's most undervalued currencies.
This list includes the currencies of various countries such as Taiwan, Indonesia, and India, with the South African rand, Egyptian pound, Malaysian ringgit, and Philippine peso being more undervalued than the hryvnia.
On the other end of the spectrum, the Big Mac Index identifies the Swiss franc, Norwegian krone, Uruguayan peso, Euro, Swedish krona, Costa Rican colón, British pound, and Danish krona as the most overvalued currencies.
The Big Mac Index is based on the theory of purchasing-power parity (PPP), comparing the price of a Big Mac burger in different countries as a measure of currency valuation. The Big Mac is a globally recognized product sold by McDonald's in most countries, comprising various food components like bread, meat, and vegetables. This makes it a practical benchmark for comparing the purchasing power of currencies across different nations.
This index is not only an innovative tool for assessing currency valuation but also a clear indicator of the purchasing power parity of various economies. The latest findings underscore significant disparities in currency values around the world, particularly highlighting the undervaluation of Ukraine's hryvnia.
