HomeNews SEARCHFactsheetsResearch CentreResourcesOZDEMAbout UsContact Us

All FinDem News Items:

News Items by Topic:

Your Comments?

Aussie Dollar 35% under McValued

Since 1986 the Economist has produced a comparison of currencies based on purchase price of a Big Mac in each country. This weeks Econimist shows an Australian Big Mac at A$3.00 which converts to US$1.62 or 65% of the USA price of a Big Mac of US$2.49.

The conclusion is that the A$ is 35% undervalued against the US$. This is based on "purchasing power parity" - i.e. the excahnge converted price consumers are prepared to pay in one country versus another for an exact equivalent commodity. It implies the A$ should be at an exchange rate of US$0.83 to the A$1 for exact parity. The last time it was at this exchange rate was in early 1989.

Posted Tuesday, 30 April 2002

Recent News

For past news items, visit the News Archive.