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Here is another sign that US dollars are too strong: burgers



The Economist's Big Mac Index – an easy way to make the value of the currencies more tangible – showed that almost all currencies in the index are undervalued against the dollar.

The Big Mac Index, released Wednesday, is rooted in the purchasing power parity theory: The exchange rates reflect the value of goods a currency can buy. If currency X can buy a commodity at a lower price than currency Y, currency X may be relatively undervalued and currency Y may be overvalued.

The strength of dollars is not new, but over the past six months it has grown even stronger, the indicator shows.

The euro, the dollar's main rival, has fallen further in value against the dollar since the beginning of the year. McDonald's ( MCD ) Big Mac is now 1
9% cheaper in the euro area than in the US, compared to 17% half a year ago.

The Russian ruble is the most undervalued against the dollar, by 65%, according to the economist's goal. A big Mac in Russia costs 130 rubles, some $ 2, compared to $ 5.74 in the US.

On the opposite side of the spectrum, Switzerland's franc is the only currency that is overvalued against the money. A large Mac costs 6.5 francs in Zurich, about $ 6.6, which means the franc is 14% stronger than it should be, according to the purchasing power parity theory.

Measured by the ICE US Dollar Index, the goat has increased 0.9% this year, according to Refinitiv. In 2018 it was up 4%. The result last year was driven mostly by the Federal Reserve's move to increase interest rates. Higher interest rates make the properties of a country, including the currency, more attractive to investors.

This year's Fed tour, which is now expected to cut prices, should weaken the dollar.

Politicians across the spectrum have noted that the strength of the dollar against its rivals is a disadvantage for US competitiveness on the world market.

President Trump has called China, Russia and the European Union currency manipulators while criticizing the greenback force. Democratic presidential candidate Elizabeth Warren has also called the currency's high value against its peers a disadvantage.

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