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FX.co ★ Only Big Mac Index still believes in ruble

Only Big Mac Index still believes in ruble

Only Big Mac Index still believes in ruble

The majority of Russians, especially the older generation, still suspiciously look at McDonald's restaurants. Funny enough, the Big Mac Index is the only gauge where the US dollar still costs 23 rubles. The Big Mac index was invented in 1986 as a lighthearted guide to measuring the purchasing power parity between two currencies.

Unfortunately, in the last few years, the ruble, as well as the Russian economy, are lagging behind, trying to rebound from the bottom albeit unsuccessfully. The national currency has already updated all the imaginable lows. It is trading at extremely low levels against the euro and the US dollar. Few people still believe in the promises of the government of a stable and freely convertible ruble. For this reason, the Russian authorities desperately need any positive news where the ruble’s positions look brighter than they actually are. That is why they recall the Big Mac index twice a year. According to this index, the ruble is far stronger, especially in comparison with other ratings.

In January 2021, the average cost of a Big Mac in the United States is $5.66, while in Russia it totals 135 rubles or $1.81. Such a simple calculation may baffle people as this index shows that the real value of the US dollar is only 23 rubles. Yet, Russian economists do not mention that restaurants set prices taking into account the purchasing power. In Russia, it is very weak. Besides, they do not consider the different cost of ingredients in various countries with different living standards. Sadly, in Russia, only those people can afford a burger for $5.66 who are rare guests at McDonald's.


*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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