Trump Has a Point: The Euro Is 22% Too Cheap Using OECD Measure
- U.S. president says ‘devalued’ euro puts U.S. at disadvantage
- Purchasing-power-parity models show euro is undervalued
Photographer: Simon Dawson/Bloomberg
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U.S. President Donald Trump’s latest Twitter missive on financial markets holds water for some currency watchers.
Trump said Tuesday that the euro is “devalued” against the dollar, “putting the U.S. at a big disadvantage.” He may not be wrong: the common currency is over 22% undervalued versus the greenback according to the Organization for Economic Cooperation and Development’s purchasing-power-parity model. And then there’s the “Big Mac” approach to gauging currency valuations, which shows the euro is about 15% too cheap.