Big Mac

The beefed up Big Mac index of the Economist illustrates the under and over valuation of currencies in terms of purchasing power. The new recipe which adjusts the original index by taking into account GDP differences per person culminates in following table:

Bottom line: Brazilian Real and Swiss Franc are heavily over valued against the US Dollar. Brazil and Switzerland are victims of the expansive US monetary policy and the raging debt crisis. The Chinese Remninbi is not over valued after controlling for the GDP difference because it is pegged to the Dollar.