Amid blue surge, Big Mac index once again showed Argentina cheap in dollars

british magazine The Economist updated in June on see Big Mac, which has been produced twice a year since 1986, for measure the price of the classic hamburger in different places of the world. With this you can compare purchasing power local currencies against dollar. The price differences of the same good allow us to deduce how much undervalued or overvalued there are local currencies.

“According to the measurement carried out by the magazine, A Big Mac costs $ 380 in Argentina and $ 5.65 in the United States. The implicit exchange rate is $ 67.26. The difference between this rate and the real exchange rate, $ 96.33, suggests that the Argentine peso is 30.2% undervalued“, Held The Economist, which took the wholesale dollar price earlier this week. The figure was slightly lower than the 34% he scored in the January survey.

Thus, according to the index, wholesale dollar should be worth $ 67.26 so the Big Mac costs the same as in the United States. The difference between this value and the current exchange rate indicates that the prices in Argentina are cheap in dollars. Measured according to the official quote, the price of the burger is equivalent to US $ 3.95.

This effect expands when taken the value of the blue dollar, which rose $ 17 this month. The ticket closed at $ 185 at the informal market this Friday and the undervaluation of the peso against the dollar, following the theory of the Big Mac index, would exceed the 63%. At this exchange rate, the sandwich costs $ 2.05.

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The price difference shows, among other things, the economic attractiveness of the country for a tourist. The American traveler who sells his dollars in an informal market you can buy 2.75 burgers in Argentina with the same amount of US $ 5.65 that you would have spent to buy a single Big Mac in your home country.

The Latin American ranking

According to the Big Mac Index, all countries in the region are undervalued against the dollar, reflecting the weakness of Latin American currencies. Uruguay is the country that has the hamburger more expensive, since he is paid US $ 5.11 on average, and shows that the Uruguayan peso is undervalued by 9.5%.

// The daily dollar exchange rate in Argentina

Brazil It is also one of the most expensive countries, since the classic hamburger is paid for US $ 4.36, which translates to an undervaluation of 22.8% for the real.

In third place among Latin Americans is Argentina, followed by Chile. In the Trans-Andean country, the sandwich costs US $ 3.94, indicating that the Chilean peso has an undervaluation of 30.3%.

In Colombia Yes PeruMeanwhile, the burger costs US $ 3.37 and US $ 3.27 respectively. Thus, the Colombian peso has an undervaluation of 40.3% and the sol by 42.2%.

Ultimately, the cheapest Big Mac of the region is reached in Mexico For about US $ 3.17, indicating that the Mexican peso is 43.7% undervalued against the dollar.

How it works?

As the creators of the index explain, it is based on the purchasing power parity theory, i.e. the idea that in the long run exchange rates should move at a match the prices of goods and services Between the countries. In this case, the McDonald’s hamburger is used, which is sold under the same conditions all over the world.

“Burgernomy never intended to be an accurate indicator currency misalignment, simply a tool to make exchange rate theory more acceptable. However, the Big Mac Index has become a global standard, included in several economics textbooks and the subject of dozens of university studies, ”explains The Economist.

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However, the global relevance of the Big Mac index, led by the former Secretary of Internal Trade, Guillermo Moreno, there was ordered in 2011 from the company What will not increase the price of this hamburger, at a time when the inflation climb.