Big Mac Index: How undervalued the Philippine peso is compared with other currencies

The Philippine peso is still undervalued by 50% against the dollar, according to the latest update of the Big Mac Index released by The Economist. As of January 2025, a Big Mac costs $5.79 in the United States compared with P169 in the Philippines. This implies an exchange rate of P29.19 versus the greenback and contrasts with the actual exchange rate of P58.44. The index is based on the theory of purchasing power parity, suggesting that in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different economies. This approach is used to help estimate how much one currency is under- or overvalued relative to another.