STORIES ABOUT MONEY ABROAD
Japan  Champagne Brunch  Euro  Italy   Russia  Peru Unusual_Money_Laundering  Switzerland

Maya Zelazo: Money Matters in Japan

August 2001 I traveled to Japan to visit my older brother who works for Texas Instruments. After the long and arduous flight I was ready to finally settle down in a bed at my brothers apartment. But before we could do that we had to convert some of our American dollars to Japanese Yen. In other travel experiences it has never been a problem retrieving money from an ATM machine, however, this was not the case at the Narito Airport in Tokyo. The ATM machine was not being very friendly with our ATM card, and because we did not have any travelers checks, we were in a bit of a bind. My mother, younger brother, and I didn't really see this as such a horrible problem. "We can just use a credit card on all our purchases, we don't need cash." Well, my older brother didn't seem to think so. So we gathered all of our American dollars and exchanged them into Yen. We were only carrying with us 15,000 Yen ($500), which at the time seemed fine. But boy were we in for a surprise. While my older brother worked during the week, the rest of my family and I traveled the Japan countryside, from Hiroshima all the way back to Tokyo. We were having a wonderful time. The language barrier was a problem, but not as big a problem as our money situation. Hardly any hotels, restaurants, or stores accepted credit cards. Cash only everywhere we went. We ended up spending our cash much faster than I think any of us had anticipated. And the expensive living in Japan did not help much either. What were we to do? We had 3,000 Yen left and had to pay our Ryokan (inn) much more than 3,000... in cash. When we thought that we were in trouble, we were told of one special ATM in Kyoto that took our international ATM card. The SumiTomi bank was our savior. We were no longer in fear of running out of cash and we were finally able to enjoy some more of the beauty and culture of Japan. This monetary system in Japan was definitely a shock to me. I am not fully aware of the economic situation in Japan, but I have a feeling that it is very different than the USA. The amount of cash that is flowing through the economy is amazing. I cannot even imagine what kind of effects this has on the economy.

Judy  Khuntaweetep: Champagne Brunch

My friend Preston was on vacation with a friend in the Czech Republic (Prague). They had made reservations at this restaurant that was recommended to them as an excellent place for a champagne brunch. He said that the brunch was magnificent and had everything one could imagine: smoked salmon, lobster, a variety of champagne and much more. When he and his friend asked for the check, they were nervous to see how much it cost. After converting the Koruny’s into dollars (checking and rechecking in disbelief), they realized that this brunch had cost the two of them only ten U.S. dollars. They left twenty U.S. dollars with wide-eyes following them out of the restaurant. From this story, we see how even though money is supposed to set a value on goods and services, the exchange rate can distort this value system

Lisa Murray:  The Euro

As of Dec. 31, the Euro will replace marks, lire and francs in 12 nations across Europe. Although Europeans have had months to prepare for the conversion, many small businesses cannot afford to use dual pricing on their goods and worry about converting their prices when the year ends. Many are also worried about re-training staff, and the added challenge of accounting for the new input prices or from distributors and middlemen. Many consumers also fear that the conversion will lead to clandestine price increases. To counter these fears, many governments have agreed to price freezing and some chains have agreed to round down when converting.

references

TIMEeurope.com "The Color of Money" September 10, 2001/Vol. 158 No. 11 BY CHARLES P. WALLACE/Frankfurt

Rahul Patel:  Millionaires in Italy

During my junior year of high school, I was fortunate enough to be a part of a school trip to France and Italy. Before we got there I was told that the exchange rate in Italy was very high but it was a little different when I got there. If I remember correctly the exchange rate was about 1300 Lire to a dollar. After about 50 of my class mates and I had exchanged our money we all felt like millionaires because we had so much of this money that we would later find out wasn't worth much. But since we thought we were millionaires we decided to spend like it. After it was much too late most of us realized that a couple hundred dollars or more had gone out the window and we really didn't have anything good to show for it. We were definatly a lot more careful about how we spent our money after that. And that was the end of my day as a millionaire because I went home with lots of junk, credit card bills and no more money, just some amazing memories. Lets just say I'll be more careful next time.

Yana  Zhirova:  Russian default Crisis

On so called "Black Tuesday" on the 17th of August in 1998 the Russian government announced that it will default on its short term security obligation payments converting those similar to T-bills papers to the long term securities. The market reacted drastically loosing 70% of its value within one month. Russian ruble depreciated from 6 rubles per dollar to 18 rubles per dollar in few weeks. The situation resulted in financial banking crisis forcing many banks to declare bankruptcy due to inability to repay the dept borrowings and the Fed funds since the main currency they were possessing lost most of its value. It took a few years for the economy to recover and stabilized Russian financial market and it's currency. The exchange rate now is 30rubles/$.

references

common knowledge, newspapers, magazines

Unusual Money Laundering in India

Money laundering is legal in India these days, but not in the traditional sense. Apparently the spending power of the country’s over 300 million poor has been on the rise, so much so that the central bank in New Delhi hasn’t been able to keep up. Old bills are wearing out, and new bills are not being distributed quickly enough. This, however, has created a market for some entrepreneurial Indians who have made it their business to clean, repair, and exchange the worn out bills. They first purchase worn, torn, or just plain destroyed bills from the poor at a discount. They then do whatever necessary to build a note that can be exchanged, patching, taping, and even combining pieces of different bills. Yet what makes them truly invaluable and sets them apart from their customers is that they have the skill, cunning, experience, and connections needed to wind their way through the hostile red tape, bureaucracy, and winding lines of the central bank to actually exchange the currency. Unfortunately, the poor have been hardest hit by the currency crunch. According to the Wall Street Journal, the “battered bills trickle down to Indians that can least afford to refuse them or throw them away.” And until the bank can hire more employees, the old, illegible notes continue to pile up. At least someone is profiting.

To read the whole story, go to http://online.wsj.com/article_print/0,,SB1029705981492071355,00.html

Paying with Dollars in Switzerland

A couple of years ago I traveled to Switzerland with a group of people whose parents or grandparents were members of the World Presidents Organization (WPO). I brought traveler's checks with me, thinking that I would hold on to some of them, for safety reasons, and exchange a couple of hundred dollars into Swiss currency. A few days into the trip I had already spent most of my Swiss currency. A couple of friends that I had met while on the trip and I decided to go shopping in town. We came upon a watch store, and decided that we could probably get a good deal on Swiss watches there. We each picked out a different watch (all prices in American dollars), and when it came time for us all to pay I had traveler's checks and a little American money. All my friends, however, had Swiss currency. Originally the price of my watch and their watches was the same ($169 US). I used my traveler's checks and cash to pay for my watch. My friends, however, were charged a service fee of $15 US because they were paying with Swiss money. I certainly didn't complain about getting the better deal, but it was hard to believe that in another country American money would be preferred to the native currency.

Matthew  Helming:  Peruvian Rainforest

 When I was a sophomore in High School I went on a trip to the Peruvian rainforest to stay for two weeks in the jungle and perform research on bats and birds. We flew to Iquitos, Peru a city on the Amazon. There we stayed for a few days before and after being in the rainforest for about days. Anyway, upon our return from the rainforest we were given a few days to roam about the small city on the riverfront and explore. In order to buy souvenirs and food and anything we wanted we had to convert American currency. This could be done in two ways. You could go to a bank and exchange currency at the going market rate or you could go to the streets. On the streets there were guys selling Peruvian currency for less than the going market rate in the banks. So it was cheaper, for us as tourists, to buy currency from the street vendors. This wasn't easy because they were hard to find and were not looked upon as completely legal. They managed to find the Americans though. So after my first trip to the bank I was returning to the van and one of these vendors approached us all and asked us if we wanted to buy currency. My teacher encouraged us and so we did, for the rest of the trip. It made for the most extraction of value from our dollar. My question now upon reflection, is what effect do those street vendors have upon real currency markets? Do they de-value the Peruvian currency? Or, are they small enough an operation that they have little effect because the currency they sell doesn't go through official channels. I also assume that this sort of thing occurs all over the world and wonder if it is something taken into account? Does it have a significant impact on currency value? Anyway, that's my story, and it was a great trip. I bought insect displays that would cost hundreds of dollars in the US for the US equivalent of 30-40$. The displays contained species that are very rare and nearly impossible to find, again something I didn't discover until now. Interesting though, maybe.