REUTERS
The Big Mac index, based on the theory of purchasing-power parity, was invented as a lighthearted guide to whether currencies are at their "correct" level.
Ukraine is at the 50th spot in the latest Big Mac index ranking by The Economist.
A Big Mac costs UAH 57 in Ukraine and US$5.67 in the United States as of January 2020. The implied exchange rate is UAH 10.05. The difference with the actual exchange rate, UAH 24.09, suggests the Ukrainian hryvnia is undervalued by 58.1%, liga.net reports.
Three bottom positions in the ranking of the most "undervalued" currencies are occupied by Romania's lei (61%), Russian ruble (61.2%) and RSA's rand (62%).
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The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their "correct" level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move toward the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries.
Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies.