Egyptian Pound Undervalued by 53.6% Against the Dollar, Big Mac index Reveals
The Big Mac Index, a widely recognized economic tool by The Economist, has revealed that the Egyptian pound is undervalued by -53.6% against the US dollar as of January 2025. The index, which measures purchasing power parity (PPP) by comparing the price of a Big Mac across countries, estimated the fair exchange rate of the dollar at 23.32 Egyptian pounds. However, the actual exchange rate has surged to 50.4 pounds per dollar,highlighting a important disparity.
The Big Mac Index also found that the pound is undervalued against the British pound sterling by -35.1%, wiht the fair exchange rate calculated at 29.41 pounds per sterling,compared to the current rate of 62.68 pounds.
How the Big Mac Index Works
Table of Contents
The Big Mac Index is an annual indicator that compares the price of McDonald’s iconic Big Mac sandwich across the globe to determine the real value of currencies. In Egypt, the price of a Big Mac meal is 135 pounds, while in the united States, it costs $5.79. Based on this comparison, the fair exchange rate of the Egyptian pound against the dollar is 23.32. The gap between this rate and the actual exchange rate of 50.4 pounds per dollar underscores the pound’s undervaluation.According to The Economist, the Egyptian pound has depreciated by -10.1% compared to last year, with the price of a Big Mac meal increasing by 2.23 pounds to 23.32 pounds in 2025.
Egypt’s Position in the Global Ranking
Egypt has slipped to the fourth highest country where the dollar is overvalued, with a -53.6% disparity. taiwan leads the list with an -85.8% undervaluation, followed by Indonesia (-56.2%) and India (-54.8%). Last year, the Egyptian pound was undervalued by -56.6%, showing a slight enhancement in 2025.
Regional Currency Trends
On the Arab and regional level, several currencies are also undervalued:
- The Jordanian dinar is undervalued by -39.1%, slightly worse than last year’s -38%.
- The Omani riyal is undervalued by -31.4%, compared to -30.2% in 2024.
- The Qatari riyal, Bahraini dinar, and Kuwaiti dinar are undervalued by -28.8%, -22.1%, and -21.5%, respectively.
- The UAE dirham and Saudi riyal are undervalued by -15.4% and -12.5%, respectively.
Conversely, the Swiss franc is overvalued by +38%, with a Big Mac priced at 7.20 francs. Argentina follows with an overvaluation of +20.1%, where the burger costs 7300 pesos.
Key Takeaways
| Currency | Undervaluation/Overvaluation | Big Mac Price |
|———————|———————————-|——————-|
| Egyptian Pound | -53.6% | 135 EGP |
| US Dollar | N/A | $5.79 |
| Swiss Franc | +38% | 7.20 CHF |
| Jordanian Dinar | -39.1% | N/A |
| Omani Rial | -31.4% | N/A |
The Big Mac Index continues to serve as a simple yet powerful tool for understanding global currency valuations. For Egypt, the findings highlight the ongoing challenges in stabilizing the pound and restoring its purchasing power.
For more insights into global economic trends, explore the Big Mac Index and its implications on currency valuations.
unpacking the Undervaluation of the Egyptian Pound: Insights from the Big Mac Index
In a revealing analysis of global currency valuations,the Big Mac Index has highlighted notable disparities in the valuation of the Egyptian pound against major currencies. Senior Editor of World-Today-News.com, James Carter, sits down with dr. Leila Mansour, a renowned economist and expert on international finance, to explore the implications of these findings and what they mean for Egypt’s economic landscape.
The Big Mac Index: A Simple Tool for Complex Insights
James carter: Dr. Mansour, let’s start with the basics for our readers. How does the Big mac Index work, and why is it such a popular tool for understanding currency valuations?
Dr. Leila Mansour: The Big Mac Index, developed by The Economist, is a creative yet effective way to measure purchasing power parity (PPP). By comparing the price of a Big Mac across different countries, it provides a snapshot of whether a currency is overvalued or undervalued.For example, in Egypt, a Big Mac costs 135 pounds, while in the U.S., it’s priced at $5.79. this comparison suggests that the fair exchange rate should be around 23.32 pounds per dollar, but the actual rate is 50.4 pounds—indicating significant undervaluation.
The Egyptian Pound: Challenges and Trends
James Carter: According to the index,the Egyptian pound is undervalued by 53.6% against the dollar. What factors are driving this disparity, and how does it compare to previous years?
Dr. Leila Mansour: The undervaluation of the Egyptian pound is a reflection of several economic challenges,including inflation,reduced foreign reserves,and geopolitical uncertainties. While the pound was undervalued by 56.6% last year,the slight advancement to 53.6% in 2025 suggests some progress. Though, the gap remains substantial, underscoring the need for structural reforms to stabilize the currency and restore confidence in its purchasing power.
Egypt’s Position in the Global Currency Landscape
James Carter: Egypt ranks fourth in the list of countries were the dollar is most overvalued. How does this position compare to other nations, and what does it mean for Egypt’s economy?
Dr. Leila Mansour: Globally, Egypt’s position highlights the severity of its currency challenges. Countries like Taiwan (-85.8%) and Indonesia (-56.2%) lead the list, but Egypt’s -53.6% undervaluation is still concerning. This ranking not only affects trade and investment but also impacts everyday Egyptians, as imported goods become more expensive, further eroding purchasing power.
Regional Currency Dynamics
james Carter: Shifting focus to the region, how are other Arab currencies performing according to the Big Mac Index?
Dr. Leila Mansour: The regional picture is mixed. The Jordanian dinar is undervalued by -39.1%, slightly worse than last year’s -38%, while the Omani riyal stands at -31.4%, down from -30.2% in 2024. On the other hand, the UAE dirham and Saudi riyal are less severely undervalued at -15.4% and -12.5%, respectively. These trends reflect both shared and unique economic pressures across the region, from oil price fluctuations to fiscal policies.
Overvalued Currencies: Notable Exceptions
James Carter: While many currencies are undervalued, the index also identifies a few overvalued ones, like the Swiss franc and Argentine peso. What does this tell us about global economic dynamics?
Dr. Leila Mansour: Overvalued currencies like the Swiss franc (+38%) and Argentine peso (+20.1%) are outliers in the global economy. The Swiss franc’s strength is tied to switzerland’s economic stability and its role as a safe-haven currency. Meanwhile, Argentina’s overvaluation is more complex, driven by inflationary pressures and monetary policy challenges. These examples highlight the diverse factors influencing currency valuations worldwide.
Key Takeaways from the Big Mac Index
James Carter: What are the main conclusions we can draw from this year’s Big Mac Index,notably for Egypt?
Dr. Leila Mansour: The index underscores the importance of addressing structural economic issues in egypt. From managing inflation to boosting foreign reserves, there’s a clear need for decisive action. Additionally, the index serves as a reminder that currency valuations are not just abstract numbers—they have real-world implications for trade, investment, and everyday life. For Egypt, restoring the pound’s value is essential for long-term economic stability and growth.
For more insights into global economic trends, explore the Big Mac Index and its implications on currency valuations.
