Many of you will be familiar with the ‘Big Mac’ Index. The idea behind this index is that a Big Mac should have a comparable cost in one country as it does in another.
Though such an index may seem a bit of a joke, it is actually a good way to measure the interconnecting power of different currencies and whether any particular currency is overvalued, or undervalued, against the USD. If you think about what goes in to making a Big Mac there are all kinds of different costs including raw materials, logistics, labour and promotional expenses.
http://www.oanda.com/currency/big-mac-indexHave a look to see where Euro is at the moment. By this index’s measurement, the Euro is still over valued against the USD. Probably not too inaccurate an assessment..