The Nigerian Naira is 8 percent overvalued based on the cost of a bucket of Kentucky fried chicken (KFC) according to data from Sagaci Research.
The gauge, whose compilers say it is inspired by The Economist Big Mac Index, measures a currency’s value on a purchasing power parity basis, using the cost of a 12-piece meal at KFC outlets.
The Yum Brands Inc. fast-food franchise has restaurants in 18 African countries.
Nigeria’s naira has been held artificially strong in the official interbank FX market by the Central Bank through unorthodox monetary policies, and demand management that has led to dollar shortages despite a collapse in oil prices.
Nigeria is Africa’s largest crude producer and relies on the fuel to generate about 70 percent of taxes and 95 percent of export income.
The KFC Index also shows South Africa’s rand is 48 percent undervalued against the dollar, while the Angolan Kwanza is the most over-priced currency on the continent.
Sagaci collected data for the survey in 16 African countries in the third and fourth weeks of January.
The index found that Kenya’s shilling is 1 percent overvalued, while the exchange rates of neighboring Uganda and Tanzania are 17 percent and 13 percent undervalued respectively.
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