Valetta from Manoel Island.
Exchange rates change so fast (and increasingly, so dramatically) that the only way to be bang up to date is to use a site specializing in current rates such as www.oanda.com. The three reference currencies we normally use on the site are the US dollar, the euro and the pound sterling, as appropriate.
For a very rough guide, use $1.50 = 1 euro and 1.50 euros = £1. For more detail, read on.
Valetta from Manoel Island.
In the 21st century, the US dollar has slid appallingly, the euro has appreciated quite a lot and the pound sterling has to some extent split the difference.
When we first thought about doing www.rogerandfrances.com, the dollar and the euro were more or less at parity; the euro at its lowest was under 90 US cents. When we started work on the site, the euro was a lot stronger, at about $1.10. By March 2008 the euro had topped $1.50. In other words, a 40 euro hotel room was under $36 when the dollar was at its strongest; $40 at parity; and over $60 with the dollar at $1.51 to the euro. This is around a 70 per cent price rise, purely on the grounds of currency depreciation, quite apart from the fact that the price in euros might well have gone up at the same time the dollar was falling. In other words, if the room had gone up from 40 to 45 euros between 2000 and 2008, the dollar price would have have gone from $36 to over $66.
With the pound, too, the rough rule of thumb we had long used against the dollar, $1.50 to buy a pound, was well outdated: the pound had at one point in early 2008 hit $2.10. Likewise, our rule of thumb for the euro, 1.50 euros to buy a pound, was well adrift too: the pound had fallen well below 1.35 euros several times. Again, this means that a 40 euro room went from about £27 to about £30: only a 10 per cent rise, a lot better than the dollar, but still very feeble.
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Unlucky pfennig. There's one Nazi-era pfennig in this lot (at the top); working down, the pre-decimal UK currency is a penny; two threepenny bits; a sixpence; and two more pennies. Getting used to new small change is a lot harder than getting used to new notes.Rough calculationsWith any exchange rate, it is better to use a very rough calculation, one you can do in your head, rather than to look for needless precision. Thus, for example, it's better to convert £ sterling to $ US with a simple factor of 2, even if you are 5 to 10 per cent out, than to have no idea of what you are paying. Likewise, convert $ US to euros by a factor of 1.5 (add on half, so $30 = 45 euros, or multiply by two thirds, so $100 = 66 euros). Convert £ sterling to euros by the same factor, but in the other direction: £50 = 75 euros, or 60 euros = £40. You'll often end up paying a bit less in dollars, and 10-15% more in pounds, if you use these figures, but at least you have a rough idea. |
The biggest problem we had was in countries like Turkey, where a meal used to cost millions: the Turkish lire lost six zeroes in January 2005 to become the New Lire, so 1 new lire = 1,000,000 old lire. Nor was Romania much better when the Leu was 40,000 to the euro.
Even so, you can work things out fairly reliably with the help of a few memorized 'yardsticks'. When the exchange rate of the Leu was 40,000 to the euro, you knew that 1000 lei was two and a half euro-cents; 100,000 lei was 2.5 euros; and a million lei was 25 euros. There's more about the leu below.
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Note that there are two conventions for the use of the full stop and the comma in numbers, so $10,000.00 could equally well be written $10.000,00. This can be interesting with (say) the Hungarian forint, where 1.000 might be a thousand, not 1 exactly. Thermometer, Miami Beach. Currency may not be the only thing you have to translate in order to understand it. Temperatures are another, and this is most easily done by memorizing a few pairs of numbers: 32F = 0C; 61F = 16C (the digits are reversed), 75F = 24C (a standard photographic processing temperature) and 100F = 38C. For the metric system, remember that a kilo is 2.2 lb and a litre is a bit less than a UK quart and a bit more than a US quart. |
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It is impossible to overstate the usefulness of approximations in currency conversions. If you already have a rough idea of the conversion, from mental arithmetic, you will know roughly what the answer should be, before you see it on the read-out of your calculator. In particular, it will be much harder to be an order of magnitude out, paying 100 euros for something that should have cost 10.
Say you want to convert 86 euros (not a promising figure to calculate in your head) to pounds sterling. Round it up to 90 (makes the sums easier); divide by 3 (= 30); multiply by 2 (2/3 of 90 = 60). Actual exchange at 1.35 euros/£ = 57.33, an error of under 5%.
Euros to dollarsFor an equally unpromising mental conversion of 77 euros to US dollars, half of 77 is near enough 40; add that to 77; you get $113 (mental arithmetic rate $1.50 to the euro). Actual exchange at $1.45/euro = $111.65, an error of under 2%. |
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Dollars to eurosLet's begin with $73. Round it down for ease of calculation, and you might just remember that 72 = 3x 24, and you'd get 48 euros (2/3 x 72). Round it up, and $75 at $1.50 is 50 euros. The actual exchange at $1.45/euro is 50.34 euros, so you are about 4% out on the first and under 1% on the second. Now try $116 the same way. Near enough $120; at 2/3, 100 euros. Actual sum at $1.45 = 103.45 euros, 3.5% out. |
If you are visiting several countries with different currencies, it is worth checking before you leave to get a rough idea of the value of the various units in the currency in which you normally think, e.g. that there are about 4 new Romanian lei to the euro, 3 to the dollar, 5 to the pound, while the Hungarian forint is about 250 to the euro, 200 to the dollar, 350 to the pound. Write this on a piece of paper and keep it in your wallet. These are pretty rough approximations (on the day this was written, the actual values were 3.65/2.46/4.95 for the lei and 257/174/345 for the forint) but they are still better than nothing.
Again, '350 to the £' is not an easy calculation, but '1000 forints is three quid' is another matter, and close enough (at the exchange rate given, Ft 1.000 = £2.90).
Several of the currencies in the picture above have been replaced by the euro -- the Italian lire, the Portuguese escudos, the Slovenian tolar -- and some others are outdated: Lenin's head is on the 25 rouble note...
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Exchange rates and feesThe very best exchange rates normally come from using your credit card, as these are least likely to have extra fees added on. Remember, though, that exchange rates may move against you, and that sooner or later, you will have to pay off those cards. The best exchange rates if you want to use cash are normally from hole-in-the-wall machines (autotellers) though there may be additional charges for using them, both a flat fee and a percentage fee. Check to see if your home bank has any agreements with other banks so you don't have to pay the flat fee; Barclays and BNP in France, for example, or if your own bank has a branch, use that. If there is a flat fee, you will obviously do better with one big hit (the equivalent of £300 or $500 or whatever) than with several smaller hits, each with its own flat fee. The worst exchange rates are normally at bureaux de change, the sort of place you find at airports or in tourist areas. Not only do they give very poor rates: they often charge quite high fees too. Masks, New Orleans. Sometimes, prices just don't seem reasonable: too high or too low. Even in the 1990s, 92 cents seemed absurdly low for these hand-painted china bisque souvenir masks. How did they do it? We don't know, though we suspect they may not have been made in the USA. |
The exchange rates you get at hotels are often comparable with bureaux de change; sometimes a little better, rarely significantly worse. Banks are normally better than hotels, but not always. In India, in particular, the banks can be slower (MUCH slower) than hotels AND give a worse rate of exchange.
Do not neglect friends who may have leftover currency from a trip to the same place: split the difference between buying and selling rates at the bureaux de change or banks, and you both win. Or just use the 'million dollar' rate off the internet.
At one time, you could use the pound sterling in many countries, simply because it was the world's reserve currency and people wanted it. Then the dollar gained ascendency, and still remains as a parallel currency in many countries today. With the decline of the dollar, as described above, the euro became more attractive to many, especially, for obvious reasons, in Europe outside the euro-zone where again it operates as a parallel currency. Outside Europe, the situation is less clear. India, for example, is much less willing than it used to be when it comes to foreign currencies, the more so as the dollar has fallen from around 50 rupees to under 40 rupees.
In any case, the days when you could get an advantageous rate (because people wanted hard currency for their non-exchangeable local money) are long gone in most of the world; normally, outside the poorest countries, you will be lucky to get as good a rate for valuta (your own hard currency, in notes) as you can get from stuffing your card in the hole in the wall.
With the advent of the hole-in-the-wall (autoteller), these are pretty much a complete waste of money in most of the world. You pay a fair premium to buy them (though normally this includes insurance); the exchange rate is variable; but the real argument against them is that fewer and fewer places accept them any more. Why would they?
Garlic stall.
We have only ever done this when we were dealing with friends, e.g. in the last days of the Soviet Union when our friends wanted dollars and cheerfully gave us several times the official number of roubles per dollar. Today, more and more currencies are freely traded, and the very few countries where the black market offers a significant advantage are usually the ones with very serious penalties for using it, so it's rarely worth the bother. Where it is legal, the advantage is normally tiny, and the dangers of rip-offs are high unless you know the people involved.
We were in Romania in July 2005 when they knocked four noughts off the value of the leu, so 1 new leu was 10,000 old lei. You need to be especially careful when this sort of thing happens, as people may still quote prices in the old unit. Even today, some French people still think in anciens francs (AF or old francs) instead of nouvelle francs (NF or new francs), especially for major purchases like houses, regardless of the fact that the euro has been the standard for a very long time. Someone may say, therefore, that their house cost 30 million (AF, not stated), which is 300,000 NF or £30,000.
The relevance of this to the black market is that you can easily be palmed off with old notes, at least, if the conversion factor isn't too great; though demand for million franc notes can never have been very great, and a million AF is still a big wedge by anyone's standards. This may be why such conversions are normally 100 or higher: confusions on a factor of 10 are much easier to conceal than confusions on a factor of 100 or more.
Do not neglect the importance of small change (and low-denomination notes) for tips, coin-operated baggage trolleys, tolls, public toilets, public telephones and the like. If you do not have any money left over from a previous trip, you may find it useful to buy something trivial (chewing gum, paper handkerchiefs) as soon as possible. Switzerland is particularly bad for this, as public toilets are coin-operated. Last time we were in Switzerland we were saved only by the kindness of a shopkeeper who gave Frances the necessary coin: we were half an hour from the border and didn't have any Swiss money (notes or coin) with us. It's not much fun being a beggar...
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Local currency is nothing like as much of a problem as it used to be, especially in Europe as the euro is more and more widely adopted: a welcome change from the days of escudos, pesetas, numerous varieties of franc, deutschmarks, lire, assorted crowns, drachmae, and so forth. The other great simplifier is the hole in the wall: we have withdrawn cash from autotellers in Turkey, India and China, as well as more obvious destinations. But it still pays to keep an eye on actual exchange rates, so you get the best you reasonably can, and to cultivate the skill of rough calculation so you have a reasonable idea of what something should cost, e.g. a box of matches shouldn't cost £5, $5 or 5 euros. Banca Transilvania. Yes, it's that Transylvania, and no, it isn't a blood bank. Currency is the Romanian Leu. |
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© 2008 Roger W. Hicks