FT Alphaville » The ‘burgernomics’ of yen appreciation
As of late July, the price of a Big Mac in Japan, at Y320 ($3.78 under Wednesday’s exchange rate), represented an exchange rate of Y85.7 in implied purchasing power parity of the dollar. The actual yen/dollar exchange rate then was Y87.2 – meaning the Japanese Big Mac was 2 per cent under-valued against the dollar, according to the index.
But here’s a beautiful twist: earlier in August, McDonalds cut the price of a Big Mac in Japan to just Y200 as part of a summer campaign. At what amounts to a 30 per cent discount, that would bring PPP down to Y52 to the dollar.