Currency exchange rates

After last week's Friday Shoot-out, I received several comments about the cost of food here - or comparison with food prices in other home towns. When I read the other's entries there were several that gave the prices of some meals then converted those local prices into US Dollars. I often get asked by friends in the US what it means when I say something like 'gas is R$2.63 per liter.' It means that gas is very expensive here.

All of this is about expats converting prices to their home currency then saying it is 'cheap' to live in Brazil.  Or when a news report says someone in Africa makes only a dollar a day. These kinds of report really have no meaning.  It is the purchasing power of the local currency in the local economy that counts.

 

I just read in http://expatbrazil.wordpress.com/ that "Approximately 9,200 people stood in line in Mauá, SP,  greater São Paulo, f or six hours to register to take the test for 120 part-time jobs with the Mauá’s county government.   Salaries for the jobs range from R$835 to R$945 ... per month." This is about 1.5 to 1.75 minimum salaries.   {like minimum hourly rates in the US}

 

If we go back to the gas prices I mentioned above, converting not the price but the volume is significant. A gallon is 3.78 liters.  So we have to multiply the price by 3.78 to get a comparison on prices of gas. A gallon of gas in Brazil would be R$9.95. To fill a 10 gallon tank on a small car once would cost more than 10% of the monthly salary for these Brazilians looking for a government job - if they even had a car.

 

Many expats are paid in a combination of local currency and in their home currency. Their companies pay them a living allowance in local currency plus put money in the bank back home.  If you want to live really well here as many expats do, (compared to their Brazilian counterparts) they must convert part of their home money to local currency also.  So converting currency to determine the true cost is okay.  I receive a small amount doing accounting and I'm paid in Reais - so for me the cost here is the cost. Even if I convert the gallon of gas to the dollar it still costs US$4.42 a gallon - Gas is expensive here. ** it cost me about R$125.00 to fill up my car, this last nearly a month - it is right at 10% of my pay. This is only one example of using exchange rates when living abroad : in my earlier blog I said, " My meal was R$9.62 and Camillo’s R$8.96." If I converted this to dollars by today's rate of 2.24 then my plate would have been US$4.27 and Camillo's lunch would be US$3.98 plus a soda or water - Yes it is cheap to live in Brazil if converted to American currency but the last time I was in Houston I went downtown to have lunch with friends - my pasta plus tea plus tax cost over US$17.00 which to me is totally out of line.... everything is relative to income...

 

go to this link to be SHOCKED and APPALLED!

http://expatbrazil.wordpress.com/2009/03/23/off-topic-what-does-a-trillion-dollars-look-like/