Philippine peso still 49.7% undervalued against US dollar

(If based on Big Mac prices)

As of July 2024, a Big Mac costs $5.69 in the US compared with P167 in the Philippines, implying an exchange rate of P29.35 versus the dollar. This contrasts with the actual exchange rate of P58.38, which means that the peso is still undervalued by 49.7%. The Economist’s Big Mac Index is based on the theory of purchasing power parity, suggesting that in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different economies. This approach is used to help estimate how much one currency is under- or overvalued relative to another.