The Economist magazine says you buy a big mac in each country....

The Economist magazine says you buy a big mac in each country. In theory they should cost the same because if they don't then smarties like Kaitie, Cerhob, Sliders, Sandune and Fforrest will go and buy a container load of them where they are cheap, ship them to the dear country and sell at a profit.

So "correct" exchange rate for USD/AUD is = (big mac price in Altamont) / (big mac price in Point Piper).

Still it is just a theory. (Purchasing Power Parity theory by name). I think really there is no such thing as correct FX rate. It is just supply and deand like everything else.