ECON 101, Mongolia edition

Effective September 1, 2013, Mongolia has a new minimum wage, 192,000T per month. The previous minimum was 140,400T, which meant that Peace Corps Volunteers were earning just over twice the minimum wage when I arrived last year.

Since we’re paid in togrogs, I know immediately whether I can afford something. There is an automatic conversion to a percent of my income that happens. I don’t have to convert the cost of things to dollars to know whether it is a good deal; I merely compare prices between delguurs, since most of what I buy is food. This means I don’t have to pay attention to exchange rates on a regular basis.

This summer, a German man was having trouble at an ATM in Govi-Altai. (He was riding his motorcycle from Germany to UB, another Other!)  He had planned to exchange a $100 bill, but it was Sunday and the banks were closed. (The fact that he had US dollars didn’t hit me until later; the international currency.) Since it was just a few weeks before leaving for my Russia trip, and I would need dollars to pay for my Russian Visa, I offered to take togrogs out of my account for him. (I had a brief moment of wondering whether the $100 bill I held in my hand was legitimate—I hadn’t seen American money in over a year!—but it was absurd to imagine that anyone would travel to Mongolia to launder counterfeit dollars.) I quoted him the last exchange rate I knew ($100 = 140,000T) and he agreed.

Turns out I got the better end of that deal, but not by too much. Now, take a look at this frightening graph showing the dollar to Mongolian togrog over the past year (from here).

When I came to Mongolia last year, the exchange rate was about 1350T=$1. Now, it is 1700T=$1. Again, since I’m paid in tugs, I wasn’t aware of this. Of course, we were all aware of the notorious inflation in Mongolia. Initially, some of us thought that store proprietors were trying to take advantage of us foreigners by charging us higher prices than those posted, only to be told by locals that, no, the prices just keep going up. In fact, the economy had been expanding so rapidly that it was noteworthy when the inflation had slowed to below 10%. Still, with such high inflation, we can probably expect another adjustment to our living allowance, so, thanks, my fellow Americans.

Here is but a glimpse of the rising prices:
Shower was 1200T, briefly 1500T, now 2000T.
one egg was 350T, now 500T.
liter of milk was 1500T, now 2000T.
peanut butter was 5500T, now 9000T.
chocolate bar was 1400T, now 1500T.
3D movie in UB was 6000T, now 7000T.
large bottle of water was 600T, now 1000T.

Another interesting money tidbit is that the minimum ATM withdrawal is 1000T (which is now about 50 cents); you can get a decent ice cream cone for that price. Can you imagine taking so little from the ATM?!! Also, I used the ATM for many months before reading a message on the screen that there is a per transaction fee of 100T. So, for those who do take the minimum amount, the fee is 10%, which I know is only pennies, but still, 10%!!!! Since reading this message, I now take 100,000T at a time (unless I am lazy and press the 80,000T button, which is the highest pre-set amount).

One of my students showed me this: Sad Chinggis.

Happy Chinggis.

I know I’ve done this with George Washington. I love that there are such simple universal amusements.