By ELLEN READ
The Economist magazine has rated the New Zealand dollar as undervalued in its annual Big Mac index.
The index compares the cost of a McDonald's Big Mac hamburger in 120 countries to calculate whether a nation's currency is at its "correct" level.
The US dollar, by contrast, is considered to be at its most overvalued in the 16-year history of the index.
"Overall, the dollar now looks more overvalued against the average of the other big currencies than at any time in the life of the Big Mac Index," the weekly said in its April 27 edition.
The magazine said the Australian dollar was furthest from "McParity" at 35 per cent lower against the US dollar than it should be. The kiwi was undervalued by 29 per cent.
In the US, a Big Mac costs US$2.49, but in Australia the same hamburger costs A$3.00 (US$1.62) and in New Zealand it costs $3.95 (US$1.77).
The British pound was one of the few currencies to outperform the US dollar, overvalued 16 per cent.
The cheapest Big Mac can be bought in Argentina for 78USc, due largely to the devaluation in January of the peso from its decade-old one-to-one peg with the US dollar.
The most expensive Big Mac, at US$3.81, is in Switzerland.
The Big Mac index is based on the theory of purchasing-power parity.
The Economist did its currency calculations last Thursday.
<i>Currency:</i> Kiwi dollar 29pc below 'Mcparity'
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