Based on Big Macs, the peso is worth more vs the dollar


Posted at Jul 14 2017 01:21 PM | Updated as of Jul 14 2017 01:35 PM

MANILA - The Philippine peso is 50 percent undervalued compared to the dollar, if the value of the currency is based on the price of the McDonald's Big Mac, according to The Economist's "Burgenomics" index.

Compared to the actual exchange rate, which has hovered at 11-year lows, the peso should be worth P25.28 to the dollar, if based on the $5.30 average price of the Big Mac in the US this month, the publication said in a statement.

McDonald's sells Big Macs in the Philippines for P134.

The annual Big Mac Index, now on its 31st edition, is not an accurate gauge of currency strength but rather an attempt to make foreign exchange dynamics more digestible, the publication said.

The peso fell to P50.624 on Friday from P50.53 on Thursday. Analysts blamed the weakness on fast-growing imports and rising borrowing costs around the world.

Only 3 currencies are overvalued in Big Mac terms, the Swiss franc, the Norwegian krone and Swedish krona, The Economist said.

The Mexican peso was the best-performing currency in the last 6 months, based on the index, as fears of a trade war between Mexico and the US waned.