The Argentine peso is improving its competitiveness according to the Big Mac Index

According to the latest edition of the Big Mac Index published by The Economist,the Argentine peso experienced a significant correction in its real exchange rate  against the dollar.

According to the survey conducted in July, the local currency is 14.6% undervalued, after having shown an overvaluation of 20.1% in January, positioning itself at that time as one of the most expensive currencies in the world, just behind the Swiss franc.

The change in trend is mainly attributable to the new exchange rate scheme promoted by the national government, which eased market restrictions and allowed for a  gradual adjustment of the exchange rate. Meanwhile, the price of the Big Mac  in Argentina  —a benchmark used for this global indicator— decreased in dollars, costing USD 5.13 at the official June exchange rate, compared to the USD 6.01 it costs  on average in the United States.

This difference leads to the purchasing power parity (PPP) exchange rate being set at $1,098.17, while the official rate was $1,286.01, reflecting an undervaluation.

This evolution  has positive implications for external competitiveness, since a peso under these conditions  favors local production over imports and improves the country's conditions  in international trade. In practical terms, it results in greater  convergence of domestic prices with international ones, a goal repeatedly stated by Javier Milei's government  since taking office.

According to the report by the British outlet, the latest Big Mac  index shows that, at least in terms of hamburgers, the trend has reversed. The behavior of the Argentine peso now resembles that of other also undervalued currencies, such as the New Zealand dollar, the Saudi riyal, and the Czech koruna, while at the opposite end are strongly overvalued currencies such as the Swiss franc (49.6%) and the Uruguayan peso (29.6%).

Additionally, the report highlights that the undervaluation of the Brazilian real (28.6%) and the Chinese yuan (40.9%) poses an additional challenge  for trade relations with two strategic partners with whom Argentina keeps significant deficits.

However, the progress of the Argentine peso toward a more realistic exchange rate  represents a significant step toward regaining competitiveness margins and correcting inherited structural imbalances.

The Big Mac Index, created in 1986 by The Economist and based on the theory of Purchasing Power Parity (PPP), compares the price of the same hamburger in different countries to assess the relative value of currencies.

Unlike other indices that depend on national consumption baskets, this measurement allows for a simple and uniform comparison of prices worldwide.

With this update,  a process of macroeconomic normalization is consolidated that is already reflected in other indicators such as the reduction of the fiscal deficit, the deceleration of inflation  and the  improvement in reserve levels.

In the exchange rate arena, the government has managed to reverse a situation of sustained lag without resorting to abrupt jumps or artificial controls, thus consolidating  a  more transparent and predictable environment for the market.