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Al-Ahram Weekly

Egyptian Pound undervalued: Economist's Big Mac Index 2025

The Egyptian pound remains significantly undervalued, according to the Economist's July 2025 Big Mac Index, as measured by both the Raw Index and the GDP-adjusted version. The index shows that buying a Big Mac in Egypt costs less than half what it does in the United States—suggesting the pound is far weaker than its 'fair value' relative to the US dollar. According to the Raw Index, a Big Mac costs EGP 125.00 in Egypt, compared to $6.01 in the US. This implies an exchange rate of EGP 20.80 to the dollar. Given the actual market exchange rate of EGP 49.35, the pound is deemed 57.9 percent undervalued. To address criticism that goods are naturally cheaper in poorer countries due to lower labour costs, The Economist also publishes a GDP-adjusted index for a more nuanced view. Under the GDP-adjusted index, a Big Mac costs $2.53 in Egypt, compared to $6.01 in the US—a 57.9 percent difference. However, when accounting for Egypt's GDP per capita, a Big Mac should cost just 28.8 percent less. This suggests that the pound is still undervalued by approximately 40.8 percent. The report comes amid a slight appreciation of the Egyptian pound over the past six months. The dollar has declined by 2.42 percent against the pound, with the current exchange rate at EGP 49.07. Rising remittances from Egyptians abroad are among the factors contributing to this trend. First introduced in 1986, the Big Mac Index was designed as a lighthearted way to illustrate purchasing-power parity (PPP)—the theory that exchange rates should eventually equalize the price of identical goods across countries. Although never intended as a precise economic tool, the index has become widely cited in textbooks and academic studies, providing an accessible snapshot of currency valuation. For those who take their fast food more seriously, The Economist also publishes a 'gourmet' version of the index. In Egypt, the McDonald's franchise is owned and operated by Manfoods, a subsidiary of the Mansour Group. The chain has been operating in the country for 28 years, with more than 131 branches across 14 governorates—mainly in Cairo and Giza—with total investments exceeding EGP 1 billion. Follow us on: Facebook Instagram Whatsapp Short link: