An Australian investment bank has developed a new indicator for tracking international currency values using the cost of an iPod. The iPod Index is used to assess the value of global currencies by comparing the cost of a 2-gigabyte iPod Nano music player in US dollars across different countries.

The index is based on the economic principle that one U.S. dollar should buy the same quantity of goods across all countries, and that currencies will fluctuate to close any gaps in purchasing power.

The concept behind the iPod Index is based on The Economist magazine’s Big Mac Index, which uses the cost of a McDonald’s hamburger to compare currency values.

As such, exclusive of duties or taxes, the tiny music player should cost nearly the same everywhere. However, a comparison of 26 counties shows significant variation; variation suggestion over or under valuation of criticism.

In the United States, an iPod Nano retails for US$149.00. But in Brazil, which topped the index, a 2-gigabyte Nano costs the equivalent of US$327.71. Canada is the cheapest place to pick up an iPod at US$144.20, in Australia, an iPod is valued at US$172.36.

[tags]ipod index, big mac index, economist index[/tags]