The World Price Index (WPI) is a monthly index of PPP exchange rates against the US Dollar across the world’s 10 largest economies. Taking inspiration from and building on the concept of the Economist’s ‘Big Mac Index’, the WPI allows for a more timely method of making economic comparisons across countries. Data and conclusions from the latest (March 2013) World Price Index survey are shown below.
The under/over valuation data illustrated below (according to the recent World Economic’s report) is based on the difference between the exchange rate value of a currency and that of the US Dollar in relation to the World Price Index calculated exchange rate. The chart illustrated underneath shows that the Japanese Yen and Brazilian Real continue to be is highly overvalued compared to the Dollar, whereas the Indian Rupee and Chinese Renminbi are significantly undervalued.
Source: World Economics