Big Mac index shows S. Korean won undervalued

SEOUL, July 31 (Yonhap) -- The South Korean currency remains about 14 percent undervalued against the U.S. dollar, though its value increased slightly over the past few months, the latest Big Mac index showed Sunday. According to the data released by The Economist, the index for South Korea came to 3.5, up from 3.03 tallied in October last year. The index for Korea was the 22nd highest among the 37 countries surveyed by the world's renowned weekly magazine. It was based on the July 25 exchange rate of 1,056 won to the greenback. The index means a Big Mac costs US$3.5 in South Korea while it fetches $4.07 in the U.S., implying that the local currency is about 14 percent undervalued against the dollar. The Big Mac index evaluates exchange rates by comparing the cost of Big Macs in different countries. The lower the index for a country, the more undervalued its currency is against the greenback, and vice versa. Most Asian currencies are undervalued against the dollar. The index for China stood at 2.27, while those for Hong Kong and India were estimated at 1.94 and 1.89. In contrast, Norway, Switzerland and Sweden posted the highest Big Mac indexes of 8.31, 8.06 and 7.64, respectively, according to the latest figures.