Egyptian Pound undervalued

The index shows that buying a Big Mac in Egypt costs less than half what it does in the United States—suggesting the pound is far weaker than its “fair value” relative to the US dollar.

According to the Raw Index, a Big Mac costs EGP 125.00 in Egypt, compared to $6.01 in the US. This implies an exchange rate of EGP 20.80 to the dollar. Given the actual market exchange rate of EGP 49.35, the pound is deemed 57.9 percent undervalued.

To address criticism that goods are naturally cheaper in poorer countries due to lower labour costs, The Economist also publishes a GDP-adjusted index for a more nuanced view.

Under the GDP-adjusted index, a Big Mac costs $2.53 in Egypt, compared to $6.01 in the US—a 57.9 percent difference. However, when accounting for Egypt’s GDP per capita, a Big Mac should cost just 28.8 percent less. This suggests that the pound is still undervalued by approximately 40.8 percent.

The report comes amid a slight appreciation of the Egyptian pound over the past six months. The dollar has declined by 2.42 percent against the pound, with the current exchange rate at EGP 49.07. Rising remittances from Egyptians abroad are among the factors contributing to this trend.