Posts filed under “Currency”
Here’s another table I don’t know what to make of: The Economist’s Big Mac index
Based on the theory of purchasing-power parity, under which exchange rates should adjust to equalise the cost of a basket of goods and services, wherever it is bought around the world.
In the present case, the "basket" is — literally — the Big Mac.
The cheapest burger in our chart is in China, where it costs $1.30, compared with an average American price of $3.15. The Economist claims this implies that the yuan is 59% undervalued.
If that’s the case, then any subsequent de-pegging of the Yuan to the Dollar could have devastating consequences for the greenback.
I do not trade currencies, but I find this to be a real head scratcher.
Good round up from Dow Jones:
Over a week after making
landfall, the broad economic fallout from Hurricane Katrina continues to
unfold. Economists are downgrading their third quarter growth forecasts for
the U.S. economy and not all think that rebuilding in the wake of the storm
will bring things back in the fourth quarter. Markets have stabilized
however, taking their cue from the price of oil and other refined energy
products, which have been hit by a major international effort to release
emergency energy reserves in an attempt to alleviate a supply crunch.
Estimates of the economic loss from the hurricane exceed $100 billion, with
the Senate’s top Democrat putting it closer to $150 billion.
are some of the main market and economic impacts: