The Cheapest Big Mac in the World

It seems like the Big Mac in Hong Kong is the cheapest in the world, according to this year’s Big Mac Index reported in an article in the Economist.

If you look at the prices alone, a Big Mac sold in Hong Kong, at USD1.72, is the cheapest in the world. The five countries with the next cheapest Big Macs are China, Sri Lanka, Ukraine, Malaysia and Thailand (all Asian countries except one), and their Big Macs are within 10% more expensive than a Hong Kong one. The countries with the most expensive Big Macs are Sweden, Iceland, Denmark, Switzerland and Norway (all Scandinavian countries except one), and their Big Macs are between 186.6% to 257.6% more expensive than that of Hong Kong.

What a bargain for us Hong Kongers. Almost makes me, a vegetarian, want to grab a bite at the nearest McDonald’s!

But the burgernomics of Big Mac index is not for comparing prices but currencies. The index is “a light-hearted guide to exchange rates, is based on the idea of purchasing-power parity, which says currencies should trade at the rate that makes the price of goods the same in each country”. So if the price of a Big Mac of a certain country, is above the benchmark price of USD3.57, the price of a Big Mac in the US, the currency is overvalued, and vice versa.

In that sense then, the Hong Kong Dollar is the most undervalued currency in the world.

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