Money and Markets

The rand is 54.5% too cheap, says the latest Big Mac Index – but it is getting big in Japan

Business Insider SA

  • The rand is 54.5% too cheap in dollar terms, as measured in hamburgers, says The Economist.
  • The publication's famous Big Mac Index shows the rand remains hugely undervalued against the pound, euro, and yuan too.
  • But measured in yen terms, a rand is worth a lot more than it was.
  • The rand is the fourth most undervalued currency in the index.
  • For more stories go to

Measured in hamburgers, the rand is currently 54.5% cheaper than it should be, according to the latest edition of The Economist's Big Mac Index, released this week.

The index, now 36 years old, looks at the prices of McDonald's hamburgers around the world, and uses those to calculate what exchange rates should be at purchasing-power parity.

What is now referred to as "Burgernomics" started out as a light-hearted experiment, The Economist says, but its easy-to-digest approach to economics has since become something of a global standard.

See the interactive version of The Economist's Big Mac Index here

As of July 2022, South Africa has the fourth most undervalued currency in the index, regardless of whether you count in dollars, euros, or pounds. It is beaten to the bottom of the list by only Indonesia's rupiah, the Romanian leu, and Venezuala's bolívar.

Adjust for gross domestic product (GDP) – on the basis that hamburgers will cost less in poorer places, where labour is cheaper – and the rand is still 42.2% undervalued against the dollar. 

The same is true of three of the other major currencies the index uses. Using the price of Big Mac, the rand is undervalued by

  • 50.8% against the euro
  • 47.3% against the pound, and
  • 34.2% against China's yuan

The one exception is the Japanese yen. As recently as early 2021, the Big Mac Index suggested the rand was 42.3% undervalued against the yen. Now the South African currency appears to be only 17.2% too cheap in yen terms. 

The yen is at levels not seen since 1998, as Japan refused to hike interest rates in step with much of the rest of the world – including South Africa – preferring to stimulate growth while others try to fight off inflation.

See also | How much more you’ll pay on credit cards, loans, and your bond after today’s rate increase

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