Last week The Economist magazine released its annual Big Mac Index, estimating that the Czech crown is nearly 40 percent undervalued against the dollar.
First released in 1986, the publication uses the price of a McDonald’s Big Macs around the world, expressed in a common currency (U.S. dollars), to measure consumer purchasing power and “make exchange-rate theory a bit more digestible.”
With the cost of a Big Mac in the Czech Republic at 75 CZK ($2.98), the index suggests that the Czech crown is undervalued by 39.5 percent, roughly the same as last year and by about 15 percentage points higher than two year ago.
According to the index, Switzerland ($6.44) has the most expensive Big Mac in the world, while Venezuela has the cheapest ($0.66).
Also released last week, the Little Mac Index from The Council on Foreign Relations, a competing theory that gives the price of iPad minis around the globe, which says the Czech crown is only undervalued by 9 percent.