According to the Big Mac Index, Uruguay’s currency is the most overvalued globally.
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The Big Mac Index was developed last month, following June, which had the lowest monthly price decline in the 15 previous months.
The Big Mac Index for Uruguay
According to The Economist, a Big Mac in Uruguay costs 259 pesos, which is equivalent to approximately $6.86. The same hamburger costs $5.58 USD in the USA. On the other hand, it is the 22.9% highest-priced hamburger in the country. The previous index showed that the local currency had a value of 27.8% higher than what was considered to be its “balanced” value.
The study also adds that, on the local market, the long-term exchange rate of the currency is 46.42 dollars per peso. The difference between the actual exchange rate of 37.77 Pesos and the previous value marked this overvaluation. According to the index, the dollar in Uruguay should be worth 46.42 pesos.
The correction is less than six months ago when the Big Mac Index suggested a rate of 50 pesos in relation to the price of 39.13, but it is important to take into consideration the inflation that the United States suffered, which increased prices, including the Big Mac which is used as an example.
Gross Domestic Product (GDP) per capita
The difference between ideal and real exchange rates is even larger if we compare Gross domestic product (GDP), per person. The Big Mac Index determined that the hamburger would cost 16 per cent less. , therefore, the Uruguayan Peso has been overvalued by 46.3%.
The local currency in this case is the most overvalued compared to the Euro,, with 26.7% more than the equilibrium value, and the Pound Sterling,, with 40% more.
It was the same in both cases. According to the Big Mac Index, the Uruguayan Peso was the most overvalued of the currencies –142.8% in Japan and 96.8% in China.
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