This can be witnessed through the so-called Big-Mac Index. The index is based on the idea of purchasing-power parity, which says currencies should trade at the rate that makes the price of goods the same in each country, reports The Economist.
If the price of a Big Mac translated into dollars is above $3.54, its cost in America, the currency is dear; if it is below that benchmark, it is cheap. So far, the yen has gained fair ground, the pound is looking stronger than last Summer, and the euro is over-valued, but less than last smmer.
The Japanese yen is holding strong to a 13-and-a-half-year peak hit against the dollar and a seven-year high versus the euro the previous day. The strength is rooted from investors uncertainty about the global banking crisis. The British sterling held right above its 23-year low against the U.S. dollar, without making any gains, reports Shinichi Saoshiro for Forbes.