From the Big Picture Blog comes a post entitled, US Dollar/iPod Index, postulating that the way to compare currencies/spending power is via iPod nano pricing. It does so by asking “how much iPod nano does the US dollar buy around the world?” This follows up on the Big Mac index:
Just over 20 years ago, The Economist magazine launched an index based on a McDonalds hamburger – the Big Mac index – a practical way of assessing whether a particular currency was under or over-valued against other currencies. It was launched as a light-hearted approach to exchange rate theory, but has had a good track record in predicting the direction of currencies.
According to the post, limitations in the Big Mac index include the inability to trade hamburgers across countries and lack of regular updating. The iPod nano “index suggests that the US dollar has potential to appreciate against a range of major currencies, with the Aussie dollar around 15 per cent over-valued against the greenback.”
The price of a 2 GB iPod nano in US dollars is as follows in the following countries:
Hong Kong $147.63
I am guessing that since this came out the price in Canada is now considerably higher than in the United States, due to the US dollar’s recent fairly rapid depreciation against the Canadian dollar.
Why is Brazil so high and Japan so low?