Thursday, November 4, 2010

Currency Exchange

Riyals are the currency here in Saudi, and for all intents and purposes 1 dollar is about 3.75 SAR (Saudi Riyals) and the exchange rate has been fixed since the mid 1980s.  However money here works just a tiny bit differently than it does back home.  Do you know those seemingly crazy Americans that think we should get rid of the penny?  Well that's kind of how it is here, only instead of not having pennies, there are no coins used here.  Sure they exist, 100 halalas are in one riyal, but to say they aren't widely used is an understatement.  Now you might think that since coins aren't used here, they wouldn't price things at fractions of riyals, but of course they do.  So after checking out at the grocery store, it's pretty common to owe something like 18.30 or 20.80 etc.  If your lucky, it'll get rounded down and you saved yourself a tiny bit (yay) or it'll get rounded up, you'll pay more than you owe, and your compensation is a little bottle of water.  As if the bottle of water makes up for a lack of coins.  Only in the desert does water become a legitimate unit of currency.

The mentality we have when spending money here is really different, both Steve and I have noticed it.  Since one riyal is worth so little compared to US dollars, it takes more to buy something so if you just glance at prices at a store, everything seems much more expensive.  We'll look at something like milk, which is 7 SAR, and think, gee 7 is a lot, milk must be expensive.  But really it's about $1.80 for a 2 liter.  It's even worse with clothes.  I bought a sweatshirt in Jeddah a few weeks ago and nearly died when I saw the price, 99 SAR.  But really it's only about $26, which isn't terrible.  We've gotten accustomed to dividing by four to decide if we think something is overpriced.  If anything the larger numbers make us pause and reconsider purchases, so it isn't all bad.

I think this is really a more ideal situation.  If we were in Great Britain where a British Pound is about $1.60 USD, buying a 5 pound item would really be around $8.  So smaller purchases would be larger than they initially seemed.  When we go to Egypt next week, the exchange rate will be even more in our favor, about 1 USD is 5.7 Egyptian Pounds.

Another unique aspect of money here is that this is almost completely a cash based economy.  When they say it hurts more to spend cash rather than put it on a debit or credit card, they are right.

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