While in Aswan, Egypt, I went to a McDonald’s restaurant. When I finished my meal I went to the counter to ask “What is the price of a single Big Mac?”, “16.5 Egyptian pounds”.
I wanted to check The Economist‘s Big Mac index, their exchange-rate scorecard (see a detailed explanation), for the case of Egypt.
Already in the last list published it can be seen that they used a 13.0 pound price, while I was given 16.5 pound (probably because I went to a more touristic McD restaurant than the average). At the time of writing the post the exchange rate is: 1 E£ = 0.1726 US$.
The reference is always the price of the hamburger in USA (average of Atlanta, Chicago, New York and San Francisco), which in the latest publication of the index was 3.73$.
The dollar cost at the exchange rate of the hamburger was 2.848$; according to that, the Egyptian pound is 24% undervalued against the dollar (in relation to Aswan prices). The Economist normally calculates as well the implied purchasing power parity of the dollar: 4.42 (=16.5/3.73) while the actual exchange rate was 5.79 (=1/0.1726).
Finally, I wanted to remark 3 other things that caught my attention in the restaurant:
- They had an employee of the month award and published it.
- The uniform of the global company made local.
- They provided delivery service… I wish they did that in Europe.