Currency exchange

Let’s face it.  The Philippine Piso is not one of the most popular currencies globally.  It’s worth among other Asian currencies is so volatile that money changers put little value in the Philippine Piso.

For the record, this is true even from the time of Cory Aquino to Gloria Macapagal-Arroyo and Noynoy Aquino being president.  This is not simply about the president of the Philippines. It’s about our economic worth.  And believe me when I say, that as a frequent traveler, the Piso is really not worth much.

Even among credit card providers, the exchange rate of the piso to foreign currency ranges from an average 0.50 centavo on top of the selling rate of the Bangko Central ng Pilipinas (BSP) to as sordid as plunging the piso into oblivion.

These are my tips for the weary traveler on currency exchange.

Cardinal Rules

As a general rule, have a budget on your estimated expenditure in your next trip.  That way, not only will you save on useless expenses on your vacation, but get to buy only what is essential.  So how do you compute your estimated expenses? The first query is: are you going for business or pleasure?

It is rare that your boss will give you pocket money for a vacation.  If yours does, you should work for him/her the rest of your life.

Most, however, travel for business.  There is a fixed per diem depending on the country of destination.  However, some companies are stingy and will provide a fixed per diem, regardless of destination for the business trip.

There are two distinguishing factors that change the rule of the game with respect to business trips.  If it is a legitimate trip or a junket? Junkets have deep pockets.  They’re the kind of bribery that are disguised as business ventures. Wine. Dine. Dance. And tour the clients.

The second rule of thumb is asking Google the question – what is the VAT of my country of destination? If you’re too lazy to ask Google, Siri may know the answer.

You know your destination.  Google the taxes where you’re going to and use that as a factor on your daily expenses.  For example, if you’re going to Thailand for vacation, $10 on breakfast will take you a long way.  Lunch will cost around $15-20 and Dinner around $25.  This is considering that you’re eating in a least 3-4 star restaurants. The current rate of VAT (Value Added Tax) in Thailand is 7%.  While they have been meaning to increase it to 10%, it has been put on hold several times.  The wonderful thing with Thailand is the incentive for tourists to get a refund when you see the sign “VAT refund for tourists” provided that the value of goods is 5000Baht and single purchases must have a value of at least 2000B. There are other countries that also have VAT refund for customers.  Japan and Singapore offer VAT refunds for tourists. HongKong and Dubai are tax free destinations, so no tax refund is necessary or applicable.  In short, if you plan to spend 5 days in Thailand for a personal vacation, USD$50 would be sufficient for you to live on a good meal three times a day. X 5 days = $250.  You can throw in $50 for transportation to and from the airport, and daily transportation to and from the hotel you’re staying.

That would mean a total of $50 a day x 5 = $250 for the 5 days vacation is more than enough for food (add $50 more or less for public transportation and that makes $300 and you’re all set).

Then peg your shopping expenditure.  Are you doing retail therapy? Or are you packing for friends?  Knowing the VAT for goods and services is helpful for your budget.  You will know what to buy, when to buy, and how to buy.  More importantly, it will help you figure out if you should carry that item all the way back to Manila, when the cost in Manila is just a measly P100 ($1.75) difference!

A gentle reminder – WHEN YOU’RE TRAVELING, YOU’RE NOT OBLIGATED TO BRING EACH AND EVERY MEMBER OF YOUR STAFF OR CIRCLE OF FRIENDS A MEMORABILIA FROM TIMBUKTU.  FIRST OF ALL, THEY DID NOT CONTRIBUTE TO YOUR TRIP.  THIS IS YOUR VACATION, NOT THEIRS. FINALLY, IF THEY ASK YOU TO BUY THEM SOMETHING AND THEY SAY, “I’LL PAY FOR IT WHEN YOU GET BACK”, DON’T FORGET TO COLLECT THE PAYMENT (OTHERWISE, THEY’LL GET USED TO MAKING YOU A MULE.)

The third rule is to change your hard earned piso to the foreign currency of your destination.

Remember, money changers make a killing at changing currencies.  That means that by changing to a different currency, you will need to pass through third party providers that are willing to change your currency to another (and risk the piso plunging or appreciating).

Don’t change a day or two before you leave.  You may not be getting a good rate.  Constantly follow the exchange rate at least for a month before traveling.  That way, you know the average exchange rate.  If the rates are volatile, the best thing to do is to change only enough for your daily needs (see computation above).  If you have a credit card in good standing, use that for purchasing the extras when you get to your destination.  Exchanging too much may end up with you having with too much foreign currency only to find out that on the day you leave, the piso has appreciated considerably.  And you losing from this.

Don’t attempt to change into DOLLARS only.  Remember, the DOLLAR is an acceptable currency globally.  BUT IT IS NOT THE ONLY CURRENCY UNIVERSALLY.  Exchanging into USD for travel to a country whose currency is Euros ends with you having to lose twice! That means that you bought dollars with your pisos (losing anywhere from 50 centavos to 1.50 for every dollar) then your dollar losing again to the Euro when you exchange your dollar to the Euro, say in Rome.

For example you bought $5000 at P53.00 (exchange rate is P52.50), then you lost 2,500 pisos.  When you get to Rome you need Euros.  Current exchange is $1 = 0.86 Euros.  Your $5000 is worth approximate 4318.92 Euros.  But that’s the exchange rate.  With the money changers, the exchange at the airport may be much less making the $5000 worth only $4200 Euros at best.  Not including the service fees of which they take 5% making the dollar lose more.  So you may lose an additional $250 in the next change, making you lose a total of P13,250 from dollar to Euro and 2,500 from piso to dollar or a grand total of P15, 750!

Double jeopardy always hurts.

There are countries that don’t have currencies available locally. Whether we like it or not, double jeopardy hits home.

Or not.

Credit Cards

The wonderful thing about that little plastic card that allows you to “borrow” money from a lender institution.

There are a few things you need to remember before flashing that card and swiping it.

1. Remember your credit limit. We all have one. Even the Queen of England or Mark Zuckerberg. The limit is in the local currency of issuance of the card.

2. If you have multiple credit cards then that may work in your favor. Foreign banks usually charge more when conversion compared to local banks.

I stopped using Citibank when in another country because their exchange rate is horrendous. If the current exchange rate is $1=P53, using your Citibank card would most probably put the exchange rate to P54.50 to the dollar. (The acceptable rate should be at least 50 centavos).

The credit cards that give the best exchange rates are: BDO, BPI and HSBC.

For all the cards, you get to earn points as you spend along. Sometimes, enough to get something of value in exchange on a later date.

Flexible payment options are also provided with credit cards. However, there’s an interest pegged at the amount you borrow. After all, a bank is a business. And a business needs to earn. Like all usurers, the cardinal rule here is – payback is a Bitch!

Mix and Match

It’s always a wise idea to bring a bit of cash and some credit cards. You’ll never know when you’ll need it.

As for me, I always check the exchange rates daily. When I see that the piso has appreciated (compared to the time I bought my currency), I use my credit card. When the piso loses while I’m on a trip, I use my cash.

Take my advice. Never. Ever. Bring. Philippine piso with you to exchange currency in a foreign country. At best, you’ll get a very lousy exchange value (except in countries where we have gazillion OFWs). At worst, no one will want to change your Piso.

(They don’t change Danish and Swedish Kronos in Manila. I will have to live with double jeopardy for this trip.)

p.s. Piso is the correct global philippine currency. Peso is the currency for the money of Mexico and other South American countries.

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