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July 2007 to July 2012 Big Mac Index Comparison

The last 5 years have been 5 very tumultuous years and the Big Mac Index shows some of the effects of the economic carnage.  The British Pound, which 5 years ago was 18% overvalued (according to the Big Mac Index 2007), is now 4% undervalued (see 2012 Big Mac Index).  Remember though, that having a currency that is “cheap” relative to other currencies is not necessarily a bad thing.  In fact, some (including myself) would argue that central banks around the world have been racing to devalue their currencies in order to increase exports and that if Greece (or some of the other PIIGS) we’re not users of the Euro, then they would have a lot less problems increasing their exports.

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