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This ratio should be the same as the exchange rate between the two countries.
If not, it means that one currency is undervalued relative to the other.
Read on to learn more about this curious index.
Also seefive investing tips to combat a confusing economy.
A Big Mac in the United States cost an average of $5.69.
(These figures are after adjustments for currency fluctuations.)
Technically, however, the GBP was slightly undervalued.
How Does the Big Mac Index Affect Individual Investors?
When a foreign currency is undervalued, buying securities with U.S. dollars provides more of a value.
The opposite is also true.
For the average U.S. investor, the Big Mac Index is more of a curiosity than areal investment tool.
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