The Economist (July 23)
2010/ 07/ 26 by jd in Global News
With bank stress tests complete in Europe, Japan breathed a sigh of relief. Perhaps the euro would strengthen and the yen finally weaken. The Economist suggests otherwise. Based on the Big Mac index, the magazine believes the Euro is overvalued by 14% versus the dollar, while the yen is slightly undervalued and should rise to 85.7 versus the dollar. More extreme still, the yuan appears undervalued by 48% versus the dollar. The Big Mac index is based on the concept that wherever you are, standard goods like a burger should cost the same amount.
Tags: Big Mac index, euro, Exchange rates, Yen