East Asian Currencies Found Undervalued by Big Mac Index

The Big Mac Index, released by the British Economist in July 2026, found that several East Asian currencies are undervalued against the US dollar. The South Korean won was found to be undervalued by 38.3%, while the Taiwanese dollar and Japanese yen were undervalued by 61% and 50.4% respectively. China's yuan was also found to be undervalued by 37.1%. In contrast, the British pound and euro are overvalued.

The US and Japan have been working together to increase the supply of dollars in the foreign exchange market. The Bank of Korea has secured a dollar procurement window through the Federal Reserve's FIMA Repo organization, which will allow it to borrow up to $60 billion in dollars if needed. The South Korean government is also holding meetings with large exporters to encourage them to bring their overseas export money back into the country and exchange it for won.

Despite these efforts, the effectiveness of international cooperation is unclear, as China adheres to a managed floating exchange rate system and limits the yuan's appreciation. Fitch forecasts that the South Korean won will continue to strengthen, rising to 1,397.9 won per dollar next year and 1361.5 won in 2028.