Related: Bank of Japan Reignites Currency War Debate Brazil's government has tried to stem the real's appreciation since. Meanwhile, low interest rates in the developed world were prompting investors to pour cash into Brazil (putting pressure on the currency to rise). He spoke out against advanced countries seeking to devalue their currencies and improve export competitiveness. This is noteworthy because Brazil’s finance minister Guido Mantega was the first official to seriously raise the issue of currency wars in 2010. On the flip side, Avent says the Brazilian currency is way overvalued, even taking labor into account.
We should expect over time the Swiss franc will lose value relative to the dollar, or the dollar will gain value relative to the Swiss franc.”Īvent says you can also do a calculation to take into account differences in income and if you apply that to Big Mac prices, he says China’s currency is actually pretty much close to fair value, despite all of the talk we hear of “currency manipulation.”
and these are similar products in rich countries, Avent says, “we can say the Swiss franc ( CHFUSD=X) is probably overvalued relative to the dollar ( ^USDOLLAR). The fast-food sandwich also tells us a bit about what currencies ought to do.įor example, if a Big Mac in Switzerland is more expensive than in the U.S. Related: Emerging Markets Are Making a Comeback in 2013: BlackRock’s Koesterich And interestingly, through burgers he could even detect the impact of the eurozone crisis on developing countries. In general, Avent notes, the Big Mac Index shows emerging markets have caught up a bit in terms of wages over the past five to 10 years. “And that really has to do with productivity differences…so one thing we’re measuring is productivity gaps between different countries and how far along these places are in terms of development and growth with the richest countries.” “When you look at a country like India or Mexico, labor there is much cheaper than it is in the U.S. Related: Job Market ‘Making Slow and Steady Progress Every Month’: Jack Ablin
0 kommentar(er)
