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. Last Updated: 07/27/2016

Strong Ruble Goes Far at McDonald's

Itar-TassA worker in a McDonalds outlet in St. Petersburg preparing burgers. A Big Mac sandwich in Russia costs 49 rubles.
The ruble's real value is 15.2 to the dollar, according to The Economist's annual Big Mac index.

The index is a simple approach to calculating purchasing power parity by accounting for the strength of individual currencies by pegging them to the cost of a single Big Mac sandwich.

The latest rate, published Thursday, is a slight drop as compared to findings in the Big Mac index in January 2006, when the ruble was valued at 14 to the dollar. This decline slightly contradicts the officially noted trend over 2006, which saw the ruble rise against the dollar. Big Mac indicators for the ruble have been relatively stable over the last three years.

Big Mac sandwiches in Russia cost 49 rubles ($1.85), or 42.5 percent cheaper than the cost of the same item in the United States, where the burger costs $3.22. The disparity between the official exchange rate and the relative costs of Big Macs in the respective countries puts the Economist valuation for the ruble at more than 11 rubles higher than the current official rate of 26.48 rubles.

But the ruble was far from being the most undervalued currency, according to the Economist's calculations.

China, where the cheapest Big Mac listed on the survey can be bought, was found to have its currency, the yuan, ranked at 56 percent below its purchasing power parity.

The Economist's index also found the Ukrainian hryvna to be undervalued against the dollar by 47 percent, while currencies of the three Baltic states ranged in their undervaluation from 22 percent to 24 percent.