A few months ago, I read of a somewhat tasteless joke, in which a Chinese woman goes to the bank desk to change money. She buys dollars at that day’s rate, and leaves.
The next day she goes again to change more money, only to find that the exchange rate has shifted against her, and her money is now worth far less. She demands an explanation from the clerk and is told that the shift is due to “currency fluctuations“, to which she replies: “Well, fluc you white people too!!!”
After Monday’s market panic across Asia, I’m definitely feeling like I’m on the wrong end of a bad joke. Derek’s Law of Currency Fluctuation has taken hold again: whatever currency I’m holding while abroad, can be expected to lose value in direct proportion to the proximity of my return date. The South Korean won has duly obliged me this week, by dropping to a value of 1300 won per US dollar.
To put this into some perspective: When I first came to South Korea in 2002. the won was trading around 1100-to-1. Over the next few years (and my ins and outs) it strengthened to around 950-1, and averaged in that neighborhood until this year. Since I returned to Korea in January, the won faded toward, then past, the 1000-1 mark, then slowly weakened until about two months ago – when it took a sudden nosedive to the 1200 mark. And yesterday past 1300.
What this means is that my relatively comfortable salary in Korea (factoring out the free housing) has had 25 percent of its trade value lopped off over the summer. My normal practice is to transfer half or more of my salary directly home after payday, knowing my living expenses are well in hand with the remainder. As recently as a few months ago, 1,000,000 won equalled 1000 dollars. Now? Less than $800.
To add insult to injury, the stock market took a huge dive yesterday, made all the huger by the fact that the Asian currency hit took a disproportionately large bite out of my positions in perfectly sound companies. Any other time, I’d take that as a signal to buy like crazy and double up my shares – but currently that looks like throwing good money after bad.
It all adds up to this: at the very moment when I’m neck-deep in making plans to go home, start my own business, and take on a few other responsibilities … my money is turning worthless. Needless to say, that’s not the foot any would-be entrepreneur wants to kick off on.
What to do? Other than grit my teeth and wait it out. And go shopping for wheelbarrows a la the late denizens of Weimar Germany:
Inflation 1923/24: a woman feeds her tiled stove with money.
At least I won’t need to buy toilet paper – I can just open my wallet now. Sigh.
