The Ukrainian hryvnia is undervalued against the dollar by 49.5%. This is stated in the data of The Economist rating for July 2024.
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Cost of a Big Mac
The cost of a Big Mac in Ukraine is 118 UAH, while in the US a burger costs $5.69. Thus, the Ukrainian currency is undervalued by 49.5% compared to the actual exchange rate of 41.05 UAH/$.
According to the purchasing power rate, the hryvnia should be at the level of 20.74 UAH/USD.
The most undervalued currencies
According to the publication, the most undervalued currencies in the world in July 2024 are the following monetary units:
- Taiwan, Indonesia, Egypt, India, South Africa.
The most overvalued currencies
- Swiss franc – by 41.8%, Uruguayan peso – by 24.3%, Norwegian krone – by 18.9%, Argentine peso – by 15%, euro – by 6.5%, British pound – by 3.6%.
Recall
In January 2023, according to the Big Mac index, $1 in Ukraine should have cost 17.16 UAH.
In 2022, the Ukrainian hryvnia fell to sixth from last in the list of the most undervalued currencies in the world in the updated Big Mac Index.
In 2021, according to the Big Mac Index, $1 in Ukraine should cost 11.5 UAH.
In 2019, the Ukrainian hryvnia was one of the most undervalued currencies in the world, and its real exchange rate, according to the Big Mac Index, should have been 10.05 UAH/$.
In 2018, according to the Big Mac Index, the hryvnia was undervalued by 65.1% – the most in the world. At that time, it was emphasized that the real hryvnia exchange rate should be 9.68 UAH/USD.
What is being assessed
The study, which has been conducted since 1986, assesses the cost of a Big Mac burger sold in the popular fast food chain McDonald's. The Economist compares the cost of burgers in all countries of the world with its cost in the United States.
The history of the Big Mac rating
The Big Mac rating began to be compiled in 1986 and the price of a regular burger was used as the basis for calculations. Financiers explained their choice by the fact that the Big Mac hamburger is a kind of analogue of a food basket, since it contains bread, meat and vegetables.