Dollar Blues

Here is a riddle for you:

What is a question I never asked in California, but I ask all the time in Peru?

Give up?

The question I’m always asking is:

“How is the dollar doing?”

The question pertains to the exchange rate between the U.S. dollar and the Peruvian sol

Since I’ve lived in Peru, I’ve cheered when the exchange rate of the dollar reached new heights against the Peruvian Sol and groaned as it sank. I realize that this is a zero sum game—that is, there is a winner and a loser. I’m sorry, but I prefer to be a winner.

 It is money in my pocket. When the dollar moves up, it means more soles for me. Hooray! When it moves down, fewer soles for me, Boo. It is as simple as that.

Not that this is only my concern or   a problem just for the American expatriates here, it is also very important to the many families who are receiving money from relatives in the United States or Europe. Many depend on these payments to supplement their budgets.

 I must admit that before I arrived in Peru, I didn’t calculate the effect that these changes would mean on our daily life. When the dollar is down against the sol, I can definitely see our budget getting tighter at the end of the month. Fortunately, we both work here and earn in soles so it does balance out some what.

When we arrived in Peru in 2005, the exchange rate was 3.5 soles to the dollar. Right now it is about 2.8. So, presently it is at a low point. But it is not at the lowest of my time in Peru.  It does move around a bit.

It is important to watch this. If you depend on a pension or other payment in U.S. dollars, these variations can make a big difference in your budget. So much so, that most of the expatriates I know have become experts in international finance. Also, by necessity we have to become avid readers of the financial news.

The reality of the situation hits you every time you go to get money at the ATM or to exchange dollars to soles with one of the money changers who populate the streets.

Lest you think that the situation is chaotic, let me, in fairness,  assure you that the Peruvian Central Bank makes a valiant effort to maintain a relatively stable relationship between the sol and the dollar. Stability is really in the interest of most everyone except the speculators in foreign currency.

So if you want to start up a conversation with an expatriate in Peru, just ask the question,

“What is the dollar doing today?’ I’m sure you will have a lively talk

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