Whether it be the Big Mac comparison, or jazzier purchasing power parity calculations with grande lattes and nano iPods, the US dollar is cheap against most currencies in the Organisation for Economic Co-operation and Development.

How cheap? Based on International Monetary Fundpurchasing power parity calculations for the end of 2007, much of the euro area is between 15 per cent and 30 per cent more expensive than the US, while Australia, Canada and New Zealand are all about 30 per cent pricier by this measure. For the latter group of Anglo-Saxon countries, the currency rate deviations from PPP are at all-time extremes.