Rand undervalued on the ‘Big Mac’ index

The rand is undervalued by nearly 60% against the dollar, according to the latest Economist “Big Mac” index, which compares the price of a Big Mac in dollars around the world. A Big Mac costs US$3.54 in the United States, and just US$1.64 in South Africa. This makes the rand the second most undervalued currency on the index after the Malaysian ringgit. Most overvalued, according to the index, are the Swiss franc (US$5.75) and Norwegian krone (US$5.74). The Economist says there have been three “noteworthy shifts” since the American summer. “The yen (US$3.21), which had looked very cheap, is now close to fair value. So is the pound (US$3.33), which had looked dear the last time we compared burger prices in July. The euro (US$4.5 a Big Mac) is still overvalued on the burger gauge, but far less so than last summer,” it says.