The US currency has reached its highest level in 30 years, according to the index "Big Mac" of January 2019 of the newspaper The Economist.

The newspaper's "light exchange rate guide" measures the purchasing power of currencies relative to each other. The gauge also compares McDonald's flagship hamburger prices, the Big Mac, in different countries with the real exchange rate between currencies to determine whether a currency is overvalued or undervalued.

For example, "a Big Mac costs 3.19 pounds in Britain and 5.58 dollars in the United States. The implicit exchange rate is 0.57. [pound per dollar]. The difference between this rate and the real exchange rate, 0.78, suggesting that the British pound is undervalued at 27%, "said the economist.

"In Russia, a Big Mac costs 110 rubles ($ 1.65), against 5.58 US dollars. This suggests that the ruble is undervalued by 70% against the greenback. In Switzerland, McDonald's customers have to pay 6.50 Swiss francs ($ 6.62), which means that the Swiss franc is overvalued by 19%. "

The dollar grew against most of its major peers last year. The Bloomberg Dollar Index, which measures the US dollar against a basket of peers, rose more than 4%.

While the dollar was relatively stable at the end of 2018, the stock market boom, the cash repatriation of US companies and the possibility that the US Federal Reserve will not raise interest rates as often the US bank note, Reuters said.

Last month, Treasury Secretary Steven Mnuchin called the strong US dollar a "vote of confidence" in the US economy.

"Part of the reason the dollar is strengthened is based on the opinion of the population on the US economy and on US economic growth relative to global growth," said Mnuchin at the # 39, a roundtable at Bloomberg's Washington office.

His remarks come about 11 months after appearing to approve a weaker US dollar at the World Economic Forum in Davos, Switzerland – comments that broke with the tradition of the US Treasury Secretary and pushed the greenback to expand what was then a loss. valuable. .

"Obviously, a weaker dollar is good for us with respect to trade and opportunity," said Mnuchin at the time, calling the short-term value of the motto "not at all our concern" .

Mnuchin said his comments on the dollar in Davos last January were "somewhat out of context." Last year, I made a comment that was meant to be a statement and not a judgment. "

Trump noted that a strong US dollar could weigh on short-term exports and erode economic growth. The president said on Monday that the currency was "very strong" in a tweet and said it was one of the reasons why the Federal Reserve should refrain from raising interest rates. interest this week.

However, Goldman Sachs Group Inc., earlier this week, warned that the US dollar could be on the verge of going down.

Federal Reserve Chairman Jerome Powell's comments have recently increased the central bank's chances of suspending interest rate hikes, Goldman's strategists said in a note.

Powell cited the events of 2016, when rates were held unchanged for most of the year due to concerns about slowing growth in China. The potential freeze presents a chance for the greenback to fall, Bloomberg said.

© 2019 Newsmax Finance. All rights reserved.