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A Financial Education

Day 420 – September 14, 2012

In addition to the occasional social unrest, unique driving situations, and struggles with language, there is another item I have to contend with while living abroad that never crossed my mind while I was in the States.

In the United States, I never had to worry about currency rates before.

When I lived in the Lower 48, and with apologies to Gertrude Stein, a dollar is a dollar is a dollar is a dollar.

Here, in Peru (as in most other non-USA countries), however things are quite different.

The currency of this country is the nuevo sol (which I have written about before), which has the symbol, S/.

My financial education has been broadened to include the fact that the value of a dollar, in relation to the nuevo sol, fluctuates. When the change is small or falls within a small range, this is not that large of a problem. However, as the chart below shows, the value of the dollar has fallen sharply since we arrived.

Falling exchange rate of nuevo sole and dollar

How low can you go?

When we arrived (circa August 1, 2011) the exchange rate was S/. 2.7111 per 1$.

Now, one greenback nets S/. 2.586…the lowest it has been since 1996.

The result of this decline is that when we exchange dollars for nuevo soles, we receive less of the Peruvian notes for the same amount of Washingtons, Lincolns, and Hamiltons.

At the moment, if rates continue as they go, our purchasing power will continue to erode.

There’s a phrase I thought I would never write.

So, why do rates go up and down?

As the old Econ101 adage goes, the answer is “supply and demand“.

Well, we could always move to Ecuador where they now use the US dollar.

Know Your Currency: The 2012 Edition

Day 315 – June 1, 2012

In the past, I have written pieces about the currency used here in Peru.

I’ve talked about the one-centimo piece.

I’ve rambled on about the 20-nuevo soles note and the 100-nuevo soles bill.

I’ve even written about who is honored on the 50-nuevo soles bill and the 10-nuevo soles piece of paper.

Last year, I wrote a post about how the Peruvian equivalent of the United States Mint was channeling the same spirit that inspired the U.S. Mint to create the Fifty States Quarters project because nuevo soles coins were appearing with different designs. Last year, I saw one-nuevo sol coin featuring a tumi and a representation of Machu Picchu.

Well, the fun continues in 2012 as I came across a one-nuevo sol coin with a new design.

Quick asideand new slang term…for you to know if you ever find yourself in Peru and want to blend in.

The slang term for a one-nuevo sol coin is a luca (pronounced lou-ka).
A fifty-centimo piece is also known as a china (pronouced chee-na).
Therefore, something that costs S/. 1.50 is said to cost luca-china.

Back to the new design…drum roll, please…

Reverse of 2012 Peru 1-sol coin

My apologies for the coin being off-kilter

The image on the back of this coin is a representation of Piedra de Saywite. This artifact is a rock monolith with more than two hundred geometric and zoomorphic figures carved into it. This item is located in the Abancay province in the Apurímac region of the country, which is southeast of Lima and west of Cusco.

Finally, the text underneath “DE SAYWITE” reads “S. XV d.C.”. What this translates to is “fifteen century A.D.”. The “S” stands for siglo, the Spanish word for “century”. “XV” is the Roman numeral for 15. “d.C.” stands for desde Cristo, which is Spanish for “after Christ”. I am taking the guess that this date is when the Saywite was discovered by the Spanish and not when the site was built.

This place looks interetsing enough that I guess I should add this location to our list of places to see.

Photo Friday: Geometric

Day 322 – June 8, 2012

Geometric” is the theme for this week’s photographic challenge from Photo Friday.

As much as I wanted to go to my pictures of the stacked stones from our December 2011 trip to Cusco, Machu Picchu, and Saqsaywaman, I thought I would try something a little different.

So, with the geometric shape of the circle in mind, I give you all the coins in the Peruvian currency toolset…

Peruvian Coins

Coin Star

Missing from this monetary family album is the one-centimo coin, which can be found here.

It’s Only Money

Day 014 – August 5, 2011

The setting is our local grocery store where I am on my daily outing to buy foodstuffs for our abode.

I am at the caja (cashier) having the items scanned and giving my standard answers to the two questions the seated woman is giving me.

The first is “No, no tengo tarjeta” (No, I don’t have a card). As in the United States, loyalty programs are big here in the large name grocery stores. However, I do not feel confident enough to fill out the application forms, so I haven’t even asked for one.

The second is “Boleta, por favor” (Boleta, please). There are two types of receipts given out by cajas. Boletas are given to private citizens and the other option, factura, is given out to people buying things for a business. Since I don’t own a business, buy for a business, or even know how to say “business” in Spanish, I always answer boleta.

Once the whole transaction is completed and I tell the cashier the latest phrase I have learned, “Que tenga buen dia” (Have a good day), I walk away and look at my receipt.

Dang it! I grouse to myself.

My total bill was for S/. 16.58. That total reads as 16 soles and 58 centimos. An interesting thing to note about Peruvian monetary transactions is they like to round up or down to the nearest 0.05. Yes, there is a 1 centimo coin, but it is rarely used. Therefore, sums are rounded are down or up. Sometimes you win and sometimes you pay. Overall, it has averaged out to a wash.

My total of S/. 16.58 was rounded up to S/. 16.55. Now, I know that my eighth grade math teacher would have a fit at this because, as he taught us, a ones digit of “8” should be rounded up. However, since Mr. Wilkinson was not here in this grocery store in Lima to complain, I dutifully made my payment. I handed over my 20 soles bill, but in an inspiration of uber-helpfullness, I also fish out 60 centimos. This completely flusters my cashier.

It is nice to know that some experiences transcend countries because I have been known to bring lines to a screeching halt with my tendency to pay the exact change. I’m not sure what it is that causes the cerebral functions of a person at an electronic cash register to freeze up when presenting with coins. I’ve caused this condition in the United States (most notably at fast food restaurants) and I’ve done the same now in the Southern Hemisphere.

I so unhinged her that she rang up the amount of money that I gave her as S/. 21.00.

Now we were in a bind because the amount of change her machine was telling her to provide to me was not the number I should receive. Breaking out the old-school method of pencil-and-paper, the cashier works out that I should receive S/. 3.05 in change. She hands me three nuevo soles coins and a five centimo coin and as I walk away to look at my receipt.

Dang it! I grouse to myself.

(Wow! Deja vu!)

I do my own mental math and realize that my change should have been S/. 4.05 (20.60 minus 16.55). I’m still only fifteen feet away from the cashier, but without a grasp of the language, I don’t feel comfortable explaining my arithmetic or complaining about one nuevo sole.

In the end, it’s only $0.36 that we’re talking about.

So I walk away.

Peru: Know Your Currency – Part Three

Day 013 – August 4, 2011

For those who would like to catch up, Part One is here and Part Two is here.

It appears that the Peruvian central bank has channeled the same spirit that drove the United States Mint to create their Fifty States Quarters Program.

As I mentioned in first post about Peru’s currency, the reverse of the one nuevo sol coin contains the country’s coat of arms.

However, I have since come across two coins that do not fit that mold. See for yourself…

Reverse of Peruvian nueva sole coin

Tails...I win

The coin on the right is from 2010 and it depicts the Tumi de Oro. A tumi, as the linked-to Wikipedia article helpfully states, is…

…a sacrificial ceremonial knife distinctly characterized by a semi-circular blade, made of either bronze, copper, gold-alloy, wood, or silver alloy usually made of one piece and used by some Inca and pre-Inca cultures in the Peruvian Coastal Region. In Andean mythology, the Moche, Chimu and Incas were descendants of the Sun, which had to be worshiped annually with an extravagant celebration.

The coin on the left is from 2011 and it depicts Machu Picchu, one of the New7Wonders of the World.

In Peru, they appear to be quite proud of Machu Picchu, and rightfully so. From what I have read of it and from the pictures I have seen, it is quite impressive. This New Wonder of the World is definitely on our family’s To Do List.

The Tooth Fairy Visits

Day 013 – August 4, 2011

Last night, our middle child was quite excited.

Let me make one thing perfect clear: He was not exciting over the prospect that the next day was his first day at his new School. Nope, not a chance about being exciting over that.

He was excited because he had lost a tooth and that meant a visit from the Tooth Fairy.

Now, we like to think of ourselves as fairly progressive and science-based parents. As our kids our growing up, we taught them that thunder was not caused by giants playing bowling; rainbows were not caused by pots of gold; the stars in the night sky were not pinpricks in the canopy of Heaven; and so on.

I firmly believe that the wonder of the natural of the world is magical enough as it is without embellishment from fairies, unicorns, chupacabras, or it being turtles all the way down. Those elements of fantasy are fine to have and can do wonders to fire up a child’s imagination, but it must be made clear (so I say) that those elements of fantasy are just that – fantasy.

Electricity, gravity, natural selection, quantum mechanics, physics, history, astronomy, and cosmology (to name a few) are infinitely fascinating to me and I desperately want to impart my love and curiosity for learning about the natural world to them. I know I can see my children’s eyes roll into their heads when I being one of my lectures as to how a microwave oven works, why the Moon looks larger on the horizon, and why the number 13 is considered unlucky (to name a few), but I am trying to convey a more important message.

And yet…

And yet, through all of this instruction as to how the world works, my lovely wife and I have gleefully told our progeny the story of how the Tooth Fairy comes to children’s beds and leaves money under their pillows in exchange for their recently lost teeth.

It is the exception to our rule and I can’t fully explain it.

Our oldest child has become wise to our game, our youngest child still believes, but as for our middle child, he is on the fence. He thinks he knows what is really going on, but he is still entranced by the possibility that maybe…just maybe…

Whether true or not, he was excited last night that he would receive the Tooth Fairy’s usual bounty of $1.00 (the going rate for our family…your mileage may differ).

This morning he was a tad chagrined to find S/.2.70 under his pillow, which is the nuevo soles equivalent of one dollar.

What did you expect?…the Tooth Fairy works with the local currency. Everyone knows that.

Peru: Know Your Currency – Part Two

Day 005 – July 27, 2011

Following up on my previous post regarding Peruvian currency, here’s a look at two other bills.

Below is a picture of the obverse and reverse of Peru’s 20 soles note…

Picture of the Peruvian 20 soles note

Currently worth about $7.30 USD

The stately gentleman pictured on the obverse of this piece of currency is Raúl Porras Barrenechea (1897 – 1960). The Wikipedia entry that I link to above describes him as a historian, diplomat, and politician.

Señor Porras wrote Pizarro, a history book about the Spanish conquistador, which was published after Porras’s death. Other works by this gentleman include Los Cronistas del Perú (1962) and El Inca Garcilaso de la Vega (1539-1616) (1946) The Wikipedia link lists all of his works.

In addition, Señor Porras was a Senator from Lima and served as the Minister of Foreign Relations, akin to the United States Secretary of State.

It is Porras’s job as the head diplomat that lets one understand why Peru’s monetary designers placed the building they did on the reverse of the 20 soles bill. This edifice is Palacio de Torre Tagle and it is the current home of the Ministry of Foreign Affairs.

A historian, a diplomat, and a politician, eh? I can’t think of one American who fits that triple threat of public service. If you know of anyone from the past of present that actually has this resume, please let me know. While I know that the current Secretary of State is 2-for-3 on the above score, I don’t think she has written a book of history. Then again, Raúl Porras Barrenechea never won a Grammy.

Multiplying Señor Porras by 5 takes us to the 100 soles note, where we find this stoic gentleman and impressive building…

Picture of Peru's 100 soles note

The pen mark on the forehead was there when I got this bill

Pictured on this bill is Jorge Basadre Grohmann (1903 – 1980). Wikipedia describes him as…

…a Peruvian historian known for his extensive publications about the independent history of his country. He served during two different administrations as Minister of Education and was also director of the Peruvian National Library.

Just like the 20 soles note above, Señor Basadre’s position of director of the Peruvian National Library explains the building on the reverse. It is the Biblioteca Nacional, the national library of Peru.

So to recap from the four bills that I have talked about both earlier and now (the 10, 20, 50, and 100), three of them (the 20, 50, and 100) have pictures on them of men who are famous for their ability to write. Do you get the feeling that this country of Peru is rather proud of those people who can wield a pen artfully?

I’ll finish off with a picture I alluded to in my previous posting about the 10 soles bill as I found an image of an older note with the upside-down plane. Enjoy.

Reverse of an older 10 soles note from Peru

Please do not adjust your monitor

Rumor (and Wikipedia) has it that there is a 200 soles bill. When I find one, I’ll let you know.

Peru: Know Your Currency – Part One

Day 003 – July 25, 2011

Previous posts have talked about our adventures in the local economy. There are some stores, mainly larger grocery stores, that take the currency of the United States of America, the dollar. However, these places give your change back in the Peruvian currency, the nuevo sol, or simply sol for short.

After a few of these outings over the weekend, we had a tidy collection of soles, both paper and coin. The sol can be divided into 100 units called centimos. Peruvian coins come in the following denominations: one, five, ten, twenty, and fifty centimos.

The newness here in Peru that I find interesting is that there are sol coins also. This is akin to dollar coins in the United States, but the concept works here as opposed to the utter and dismal failure back in the States (and here and here).

The metal version of the sol comes in values of one, two, and five.

The obverse of all the coins shows the value while the reverse shows the coat of arms of Peru.

The 2 and 5 soles coin have representations of the Lines of Nazca.

(Little known fact: Thirty-six miles outside of Nazca, Peru, there are other mysterious lines carved into the desert plain. Those lines only make left-hand turns and they are called the Lines of Nascar.)

I’ll wait for you to stop groaning.

In case you were wondering why part of the title of this entry contains the text “Part One”, it’s because this post will only talk about two of the soles bills that Peru uses. This is what is known in the artistic world as “the cliffhanger” (also known as the “…to be continued” effect in the world of television).

Speaking of art (nice segue, eh?) this takes us to the subject of the subject on the fifty soles.

The 50 sole bill

Not U.S. Grant / Not the U.S. Capitol

The bespectacled gentleman you see is Abraham Valdelomar Pinto (1888 – 1919). His Wikipedia entry describes him as…

a Peruvian narrator, poet, journalist, essayist and dramatist; he is considered the founder of the avant-garde in Peru, although more for his dandy-like public poses and his founding of the journal Colónida than for his own writing, which is lyrically posmodernista rather than aggressively experimental.

Credited with writing essays, poetry, plays, biographies, and novels, this would be like having a combination of Allen Ginsberg and Issac Asimov on the $50 note (which, truth be told, is something I would pay $50 for the U.S. Mint to do).

I found a fragment of one of Valdelomar’s poems entitled Tristita, which starts off…

Mi infancia que fue dulce, serena, triste y sola
se deslizó en la paz de una aldea lejana,
entre el manso rumor con que muere una ola
y el tañer doloroso de una vieja campana.

Since my Spanish is atrocious (see Disclaimer No. 2), I asked Google Translate for assistance and it provided the following…

My childhood was sweet, serene, sad and lonely
slipped into the peace of a remote village,
between the gentle sound that dies a wave
and the painful toll of an old bell.

The reverse of the cincuenta soles bill shows Laguna de Huacahina, an oasis in the desert near Ica, a city in southern Peru.

The 10 soles note can be seen here…

Picture of the 10 soles note

May be the only time a man with goggles appears on currency

The man on the obverse is a Peruvian military aviation hero José Abelardo Quiñones Gonzáles (1914 – 1941). He is revered for his sacrifice during the 1941 war between Peru and Ecuador, when, after taking heavy damage to this plane, he crashed his aircraft into the Ecuadorian positions.

He is also credited with being the first cadet at Central Aviation College Jorge Chávez to perform an inverted loop. This explains why the older version of the ten soles bill has an upside-down plane on the reverse. At first I thought it was a misprint (similar to this famous oops), but the printers meant to do that.

The current reverse of the diez soles note shows some place or other.

As a final note on these notes, please do not print out these sample images and try to pass them off as real. Counterfeiting is sort of an issue here.