When I teach International Business, I always spend a few lectures on the trials and tribulations of foreign exchange rates. Granted, not the most exciting topic and students' eyes glaze over; as it seems to be a very "academic" discussion.
Well, I am in the middle of living this lecture- and it has not been fun.
Poland's currency is called the Zloty (they are not allowed to adopt the Euro until at least 2012). Well, the Zloty has been getting strong and the US Dollar has been getting weak. As I get paid in US Dollars (a fixed salary), but all of our expenses (rent, food, transportation, etc) are all paid in Zlotys- this is a dangerous mixture these days.
Since I was awarded my Fulbright in April- the Zloty has increased 21% on the Dollar (and is still on the rise). This means that everything I will purchase in Poland on my US salary- just got 21% more expensive. An example- since the time I found my apartment to today- the monthly rent I will have to pay has gone up by $146 (just due to the exchange rate).
I have one of two choices- ride it out and hope it falls again (but easily I could lose more ground and money) OR go out and buy a fist full of Zlotys now (we would call that hedging).
Great case study for my students when I return- but it really sucks to experience it.
MPG
1 comments:
while you are in Poland, it would be interesting to find out how well people remember the rationing coupons of the 70s and early 80s. As I'm writing I have one in front of me from 1981 that shows children allowed 100 grams of chocolate, 300 grams of soap, 1000 grams of macaroni and starches, 1000 grams of flour, 250 grams of candy, and 2000 grams of sugar- a starvation diet. Could they even use the dollar then? or was that just for tourists at the tourist stores?
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