No, I'm not talking about the old lady in that commercial from the early '90s (remember that, guys??). Unfortunately, I'm talking about the US dollar.
It has been falling....
(you get the picture)
since we moved to Moscow.
It used to be pretty easy to calculate the difference between the two currencies. In July of 2004, there were 30 rubles to every dollar. $1 equaled 30 rubles. $10 equaled 300 rubles. $100 equaled 3,000 rubles. Now, instead of getting 3,000 rubles for my $100, I get 2,355! $10 equals 235 rubles. $1 equals 23.5 rubles.
So when I now exchange $100, I'm getting 645 rubles less! 645 rubles equaled $21.50 when we moved here in 2004... Now that the ruble has grown stronger as the dollar falls, 645 rubles are actually worth $27.39--$27.39 that we're not getting out of the ATM!! That's a LOT of money we've lost, are losing, and will continue to lose!
The 35 ruble container of juice used to cost us $1.17; now it would now cost us $1.50. THAT ADDS UP! At the same time, prices in rubles have also risen... so that juice container actually now costs us $1.91!
Mind you, I'm not crying poverty. Most expatriates working for US companies in Moscow have some kind of "Cost of Living Allowance" as part of their salary packages that takes into consideration the higher expenses here. Still... a higher cost of living and the falling dollar are apples and oranges. Related, but not the same. If on January 1st the ruble is at 28 rubles to 1 dollar, but by September it has fallen to 20 rubles per dollar, that's 7 rubles per dollar that Joe Expat has lost in income.
So... Why is the dollar falling so much? I've heard many explanations:
- One key reason is that the Federal Reserve has been printing more money and expanding the money supply, which dilutes the value of existing dollars.
- A trade imbalance between the
and other countries. The USA imports many more products than it exports, and those countries must be paid for their goods in their currencies. USA
- The cut in US interest rates.
- Freefall of US housing market.
current account deficit stands at more than 6% of gross domestic product. To put that into perspective, most economists believe that 4% represents the danger point for an economy. (MoneyWeek) US
- The dollar is considered weak in comparison to other currencies--many of which are rising as their individual countries' economies prosper.
- Others will throw in comments about the war in
--but I haven't an explanation as to how that actually impacts the dollar. Iraq