iPod index suggests Australian dollar overvalued

CommSec chief economist Craig James believes the Australian dollar could be about 10% overvalued, according to the latest results of the CommSec iPod Index.

The Index, which attempts to measure the impact of currency changes on consumer spending and retail margins, found the new Australian iPod Nano costs $US181, excluding taxes, compared to the $US149 price.

“Certainly the US is the cheapest place in the world to buy an Apple iPod Nano once currency changes and taxes are taken into account. That suggests that Apple may be under-pricing the goods in the US compared with other countries,” he said.

“But the same iPod Nano costs closer to $US160-165 in Australia, Europe and some other Asian countries – that is, around $US10-15 more than in the US… Arguably the Aussie dollar, Euro and Swiss franc may be considered to be around 10% over-valued against the greenback.”

Australia has now slipped to 18th in the iPod Index, down from 14th in March.