Big Mac index suggests Ukraine’s hryvnia currency 46% undervalued

21 September, 04:29 PM
Ukraine’s currency ‘somewhere between Turkey and the Philippines’ in value relative to US dollar (Photo:Kevin Lanceplaine / Unsplash)

Ukraine’s currency ‘somewhere between Turkey and the Philippines’ in value relative to US dollar (Photo:Kevin Lanceplaine / Unsplash)

Ukraine’s hryvnia currency is around 46% undervalued, according to the Big Mac Index – an informal economic indicator of the values of the world’s currencies relative to the U.S. dollar. 

With McDonald's having opened its doors in Ukraine, the Big Mac Index for the country can be calculated for the first time in months, MP Yaroslav Zheleznyak said on his Telegram channel on Sept. 21.

He noted that McDonald's is now charging UAH 101 for a Big Mac burger in Ukraine. When the July index was calculated a Big Mac in the US cost on average $5.15.

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Thus, according to Big Mac prices, the official exchange rate of the hryvnia to the dollar should be UAH 19.6/$. At the same time, the official National Bank of Ukraine exchange rate is now $1 = UAH 36.6/$.

According to the deputy's calculations, the Ukrainian hryvnia is undervalued by about 46.4%.

“(That puts Ukraine’s currency) somewhere between Turkey and the Philippines,” said the deputy.

In July, the Economist weekly newspaper, which created the Big Mac Index, didn’t include the hryvnia in its report, as at that time McDonald's restaurants weren’t operating in Ukraine.

The most undervalued world currencies in July 2022, according to the Big Mac Index, were the currencies of Indonesia (a burger there is 54.6% cheaper than in the United States), Romania (55.7% cheaper) and Venezuela (65.8% cheaper).

The most overvalued currencies were the Swiss franc (+30.3%), the Norwegian krone (21.6%), the Uruguayan peso (+18.1%), the Swedish krona (+8.5%) and the Canadian dollar (+2.0% ).

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