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6 Jul, 2007 07:59

Big Mac: Russian rouble undervalued

The Big Mac Index suggests that the rouble is still undervalued – even though it is getting stronger.

A Big Mac in Russia costs 40% less than in its homeland – the USA. The Economist magazine uses the hamburger's price to measure differences in the purchasing power of different currencies.

According to the Index, the world's most famous hamburger costs $US 2 in Russia, while in the U.S. the price is $US 3.40.

The most expensive place to buy a Big Mac is Switzerland – where it costs $US 5.20. The cheapest is China – at $US 1.40.

The Big Mac Index provides a very rough guide to how far currencies are from fair value. Using this yardstick, China's Yuan is the cheapest currency.