The iPod International Currency Index

Snad writes "The BBC is reporting that an Australian bank has adopted the price of Apple's iPod as a means of tracking international currency values. Similar to The Economist's Big Mac index, this 'iPod index' tracks the price of a 2-GB iPod Nano around the globe and uses purchasing power parity to determine relative currency value. A sample quote: '"The index suggests that the US dollar has potential to appreciate against a range of major currencies, with the Australian dollar about 15% overvalued against the greenback," said Craig James, Commonwealth Securities' head economist.' The cheapest place to buy an iPod is Canada — $144 (but Hong Kong and Japan are almost as cheap); the most expensive is Brazil — $327."

Comments

Dumb

[pubjames]

This is dumb. The point of the Economists Big Mac index is that it reflects a range of local costs - labour, retail space, locally produced ingredients. An iPod does not - it is almost certainly not made locally, or from local raw materials, and so it does not make a good measure of local PPP.