Cultural letter #10 The American dollar in Poland
The dollar...how does it work?
The Polish currency is the zloty. Each zloty is split up into groszy. While we receive our money in the form of the American dollar it is easy to exchange the dollar for zlotys. We can do this at a bank, or at a place called "Kantor" where we simply slide the dollars under a glass window and the worker slides the equivalent zlotys back to us. Many Polish people "buy" dollars because the dollar is supposed to keep up better with the rate of inflation than the zloty.
Last time (last week) we checked the exchange rate, it had fallen to 4.1 zlotys to the dollar. It fell as low as 4.03 a couple of weeks ago. It had been as high as 4.7 to the dollar. Does this affect us? Yes it does. Let me demonstrate. If a bill is 800 zlotys, at the rate of 4.1, then we must have $195 to pay that bill. If the exchange rate is 4.7, that bill only costs us $170. The exchange rate fell dramatically during the month of November and continued to fall throughout December. It has fluctuated around 4.1 during January. This combined with the annual inflation rate here (which is much higher than the states), has meant that our real "buying power" has shrunk so that it is quite a bit less than it was when we returned to Poland in 1999! I don't have the specifics, but that is how it has worked.
For example, let's take a "real" example. A real "Polish" Christmas tree cost 45 zlotys last December (really pretty foreign ones were LOTS more--$35-60). For us, this year, that was about $11. In early November, that would have been about $9.50.
I thought I'd give you some current prices so that you can know what things cost. Overall, most people still think that we can get good "bang" for the buck, but the "bang" has about fizzled. BUT, for your information....here are some prices.
Liability insurance for the van - 940 zl for 6 months ($229)
1 liter of milk (about a quart) - 1.50 zl ($.36)
1 stamp to the states - 2.4 zl ($.58)
1 liter (about a qt.) of cheap ice cream, locally - 6 zlotys ($1.46)
1 liter (about a quart) of really good (real vanilla, etc.) ice cream locally - 11.40 zl ($2.78)
1 package of 10 flour tortillas--the only brand available - 12 zl - ($2.92)
1 loaf of white bread 1.60 zl ($.39)
1 liter of diesel fuel 2.92 zl ($.71)
1 pack of 500 sheets of white copy paper 17 zl ($4.14)
1 500 gram (about 1 lb.) package of brown sugar 12 zl ($2.92)
1 kilo of regular white sugar - 2.40 zl ($.58 for 2.2 lbs.)
1 jar of maraschino cherries - 19 zl ($4.63)
phone calls, per 3 minute connection - 29 groszy ( $.07)
Big Mac Meal with large fries and drink 11.90 ($2.90)
1 can of Pringles 7.50 zl ($1.83)
1 kilo of potatoes 70 groszy ($.17 for 2.2 lbs.)
film developed, 4x6 pics, per picture 70 groszy (no 2 for 1 deals) ($.17 per picture)
1 bus ticket 2.40 zl ($.58) (you need to use one for each leg of the journey or for each bus you use)
parking at the airport for 30 minutes 4 zl ($.97)
1 can of soda pop - about 12 oz - 2.10 zl ($.51)
disposable diapers tend to be around 1 zloty per diaper ($.24)
Now, just like everything, you can go UP from here. I tried to pick things that were basic, in other words, not "a couch" or something like that as you can find the cheapest running from about $400 and up. I chose instead, basic things that we might buy/must buy (like milk) quite often.
Some things are still quite a good deal for us, and we are pleased. Other things tend to be expensive--at least, they "feel" expensive. After talking with some missionary friends, we realize that it is all perspective--where you are coming from, what brand names you are used to, etc. We do know that things here seem to be quite a bit more expensive than in Lithuania--and compared to Germany, some things are quite a bit cheaper (like McDonalds), but some things are about the same (canned veggies). We tend to try to do our major shopping at the larger supermarkets if possible as their prices are a little less--but in order to do that, we have to spend between $3 and $7 for fuel to get there and back, SO, the payoff isn't as large as it might seem initially.
In the last few years many brands have come into Poland which has helped as competition has kept some prices down--for example, the CHEAPEST irons used to be about $40--but now you can buy $10 irons. Of course, the $40 iron was nicer than the $10 iron--but as a new missionary needing to buy everything, it really hurt to have to buy everything at such sky high prices. There are open markets, but sometimes the open market isn't cheaper than the supermarkets--but the variety of fruits/veggies is usually bigger. The first year we were here, we paid the equivalent of about $3 for our Christmas tree-this year, about $11. (Still cheap by American standards, but it is a big jump in this amount of time.) Some things like phone rates and electricity/gas prices have climbed, of course, with no regard to the dollar. :)
So as you think about the American dollar--for us, it would be helpful if the market and American economy were stronger. If the predictions are strong about the American economy, then we get more zlotys for our dollar.
This is simply an informational letter. When I walk up to the kantor, I feel like it is always a litle "gamble"--should I exchange $100? $200? $300? Will the rate go up or down by next time I come?
That's it for your very basic
economics lesson from