Today’s Number of the Day is R9; because the Big Mac Index suggests South Africa’s rand is far stronger than the market exchange rate implies. On a simple purchasing power parity comparison, a Big Mac priced in rands versus dollars spits out an “implied” rate of roughly R9/$; a headline that sounds like cheaper travel, cheaper imports, and a whole new personality for your bank balance.
But this isn’t a prediction. It’s a benchmark; a deliberately blunt tool created by The Economist to provoke a simple question: is a currency overvalued or undervalued?
Francis Herd and Aakash Bramdeo unpack what the index does well, where it misleads, and why economists still place the rand’s “fair value” closer to the mid-teens when you account for income and real-world risk. Plus: why sentiment has improved, what reforms and credibility signals do to a currency, and why “undervalued” doesn’t automatically mean “about to snap back.”
Catch up on all Number of the Day episodes here: https://www.enca.com/number-day-podcast
