$1000 a week is an unbelievable amount of money in China. In China the two banks that will nearly always take foreign debit cards are 1)China Construction Bank and 2) Bank of China. That way you get the credit card exchange rate, which is usually a lot better than banks/etc. The best way to exchange money in any foreign country is usually to use your foreign ATM card and withdraw locally. Now you may face a terrible problem if you don't spend all the money - it can be a terrible ordeal to change RMB back to the USD, as it's not a freely convertible currency.

Comparing actual exchange rates with PPPs or with the Big Max index indicates whether a currency is under- or overvalued.Well, you shouldn't have exchanged the money before you left, but you probably already knew that. How the Big Mac index is usedĪfter the value of the Big Mac index is calculated, it is then compared with the actual exchange rate. Relative to its Big Mac PPP the euro is 19% overvalued against the dollar. This would be 3.42 Big Mac purchasing price parity meaning that the yuan at 11 market exchange rate would be 56% undervalued. * Average of New York, Atlanta, Chicago, San Franciscoįor example, the cheapest burger is in China, at 11 yuan or that is $1.41, compared with an average American price of $3.22. The Big Mac PPP exchange rate between two countries is obtained by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency).īig Mac PPP (index) =. The Economist introduced this method as a measure that ' seeks to make exchange-rate theory a bit more digestible'. The index was introduced by The Economist in September 1986. The index is the exchange rate that would mean hamburgers cost the same in America as abroad.

The Big Mac index enables a comparison between many countries' currencies. The Big Mac was chosen because it is available to a common specification in many countries around the world, with local McDonald's franchisees having significant responsibility for negotiating input prices. In the case of the Big Mac index, the basket is the McDonald's Big Mac which is sold in about 120 countries. The purchasing power parity theory is based on the principle that a dollar should buy the same amount in all countries. Under PPP, exchange rates between two countries should adjust to equalize the prices of an identical basket of goods and services across countries. The index is based on the theory of purchasing power parity (PPP).

Cost of a big mac in rmb