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BZeal Weekly, 2007 July 5


BIG MAC INDEX: BIG CHANGE IN BRAZIL
by J. Randal Matheny

The Economist, a major British financial magazine, has 
released its Big Mac Index, which measures the power of 
the dollar around the world by the price of the 
McDonald's franchise's main sandwich. 

In Brazil, the Big Mac went from being cheaper than its 
American equivalent on January 31 to costing more on 
July 2, according to a report today one of Brazil's big
newspapers, A Folha de Sao Paulo. 

In January the Big Mac costed US$3.22 in the US and in 
Brazil it went for US$3.01. But by July it costed 
US$3.61, more than the US price of US$3.41. That means 
that today you can't buy a Big Mac in Brazil for what 
you play in the US. You'll have to cough up more 
coins. 

On January 31 the dollar was at R$2.13 and on July 2 it 
had dropped to R$1.91, said the Folha newspaper today.

The Big Mac Index went from -6% in the Real/dollar
measurement to plus 6%, said the report.

Estimates are that the dollar against the Brazilian 
Real, coupled with loss against inflation, has lost 
somewhere around 65%-70% over the last four years. 

Missionary Eddison Fowler had calculated that in the 
two-year period of 2004-2005 the dollar lost 55% of 
its buying power against the Real. 

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