Thursday, July 29, 2010

Ignored by The Economist

The Indian Rupee doesn't figure on the latest Big Mac Index. Probably because the franchise doesn't have a beef burger variety available for consumption in India. Replacing chicken for beef, and running through the numbers it seems the INR is undervalued by almost 65%. This indicates the PPP value of the INR to the USD to be in the range of Rs.15 to Rs.17.

Bad news for the NRI's remitting money to India, "Enjoy it while it lasts. The Rupee is headed just one way, and that's against you". :)


Wafa said...

Considering chicken is actually a lot more expensive than beef in India, it's actually even more undervalued. Or did you account for that price differential?

On the other hand, the rupee not having full capital account convertibility is probably depressing demand for it, so then it may be less undervalued than it appears.

Nitin said...

wafa: totally agree about the substantial price differential between chicken and beef. i did think of adjusting for it, but like you said, there are enough factors on the other side too. even if we double the value to Rs.30, to account for such, its still majorly undervalued.