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Big Mac attacks

  • 2004-12-22
  • Baltic News Service
TALLINN - Despite the recent rise, the Estonian kroon continues to be undervalued in relation to the U.S. dollar, The Economist's most recent Big Mac index shows.
The index, based on the theory of purchasing power parity, shows that the kroon is 16.67 percent undervalued in respect to the dollar, which compares to the May analysis that had the kroon 22 percent undervalued.

The price of a Big Mac in Estonia at this point is 29.50 kroons, which based on the Dec. 17 official Bank of Estonia exchange rate (11.7622 kroons to a dollar) comes to $2.5.

The index shows the Chinese national currency as being the most undervalued (58 percent) against the dollar, with a Big Mac in China costing the equivalent of $1.26. In Switzerland a Big Mac fetches $5.46, making the national currency there 80 percent overvalued in comparison with the dollar.