MercoPress. South Atlantic News Agency

Uruguay’s peso the most “overvalued” currency as it tops Big Mac index ranking

While the Big Mac Index is a light, illustrative gauge rather than an official exchange-rate model, the result lands amid a local debate on competitiveness and a weak dollar

Uruguay’s peso has been labelled the world’s most “overvalued” currency against the U.S. dollar on a GDP-per-capita-adjusted basis, according to the latest Big Mac Index published by The Economist and cited by Uruguayan media. Under the adjusted methodology, the peso is estimated to be 83.9% above its implied “long-run equilibrium.” In the unadjusted ranking, Uruguay places second, with 43.1% overvaluation, behind the Swiss franc.

The index hinges on a straightforward comparison: in January, a Big Mac cost UYU 339 (US$ 8.76) in Uruguay versus US$ 6.12 in the United States at prevailing market rates. That gap implies an “equilibrium” exchange rate of UYU 55.39 per dollar, well above current levels, according to the local summary of the index.

While the Big Mac Index is a light, illustrative gauge rather than an official exchange-rate model, the result lands amid a local debate on competitiveness and a weak dollar. Finance Minister Gabriel Oddone has argued the move is driven by global dynamics and warned that a misaligned exchange rate can spill into the real economy. “This situation affects real activity and has consequences for investment, growth and employment,” he said during an official briefing posted by the ministry.

Oddone also outlined steps aimed at cushioning the impact: the Treasury is negotiating FX forward purchases to meet foreign-currency obligations and coordinating similar strategies with state-owned companies, while fast-tracking a package of competitiveness measures. “We understand that today’s dollar price is attractive enough to bring forward purchases,” he said, as quoted by Montevideo Portal.

On the monetary side, the Central Bank of Uruguay cut its policy rate by 100 basis points to 6.5% on January 26, framing the move within its inflation-targeting strategy and the goal of maintaining convergence toward its target.

Market expectations compiled by the central bank do not point to a sharp reversal: the BCU’s Economic Expectations Survey shows a median exchange-rate forecast of around UYU 40.19 per dollar by end-2026.