The Philippine peso remains significantly undervalued by 50.4% against the US dollar, based on the July 2025 release of The Economist’s Big Mac Index.
This semi-annual report uses the price of a McDonald’s Big Mac as a reference for determining the purchasing power parity (PPP) of global currencies. In the United States, a Big Mac costs $6.01. However, in the Philippines, the same burger is priced at ₱169. Using this comparison, the implied exchange rate is ₱28.12 to $1, suggesting that the peso should be nearly half its current value. The actual market exchange rate as of July 2025 is ₱56.73 to $1.
The Big Mac Index, though informal, is a widely cited tool that aims to highlight currency misalignments. It operates on the theory that in the long run, exchange rates should move toward the rate that would equalize the prices of an identical basket of goods and services—in this case, a Big Mac—in any two countries.
Among the 55 currencies tracked, the Philippine peso is one of the most undervalued. Only the Indian rupee (-56.2%), the Lebanese pound (-56.7%), and the Egyptian pound (-57.9%) fared worse.
On the flip side, the most overvalued currency is the Swiss franc, which is 49.6% stronger than the US dollar according to the index. Other overvalued currencies include the Norwegian krone (+28.6%), Swedish krona (+22.1%), and the euro (+21.8%).
Several ASEAN and Asian currencies also registered steep undervaluations against the US dollar, including the Indonesian rupiah (-51.6%), Thai baht (-37.1%), and Vietnamese dong (-47.9%).
The US dollar is used as the base currency for this index. The disparity shown in the index does not necessarily mean the currencies will adjust soon but may indicate imbalances in international competitiveness, monetary policy, or inflation levels.
