Analyse the current state of the financial markets

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Reference no: EM131621960

Analyse the current state of the financial markets. An amusing example of purchasing power parity is The Economist's Big Mac index. Under PPP, movements in countries' exchange rates should in the long-term mean that the prices of an identical basket of goods or services are equalised. The McDonalds Big Mac represents this basket. The index compares local Big Mac prices with the price of Big Macs in America. This comparison is used to forecast what exchange rates should be, and this is then compared with the actual exchange rates to decide which currencies are over and under-valued.

Required: Select one currency from The Economist's Big Mac index. Conduct a secondary research on this currency and its recent trends. Analyse their historical 5 values and determine whether they have been over or undervalued based on the Big mac index.

Reference no: EM131621960

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