NZ dollar 14% undervalued, says the Big Mac Index

They call it burgernomics, and the data doesn't lie. (Image: Getty)

Mon, 25 Jul 2022

The Big Mac Index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Y...

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