100$ of Uzbek Currency
Tashkent won’t be Capital of Culture anytime soon, as I’ve come to realise on my daily hikes from my digs to one tin pot embassy or another. Its a city of avenues lined with vapid tower blocks. The few sites of interest are so spread out that its culture quotient is diluted to almost homeopathic concentrations.
Uzbekistan also makes it to number 12 of Foreign Policy Magazine’s failed state index mostly for reason’s that it wouldn’t be clever to write about here, though a certain NGO with a candle and barbed wire as it’s logo could shed some light on why. Not that I’m suggesting a link between cultural richness and a functioning state- though I’m sure there most definitely is.
One thing that we can write about though is the ludacris state of Uzbekistan’s currency the Uzbek Som.
This morning, I needed to change some dollars to Uzbek Som’s. When the girl at the desk heard this she excitedly asked me if she could change them for me. A little suspicious, I said sure, suggesting a rate just over the going black market rate- expecting a haggle. No haggling, 200,000soms for $100 (about 5% above the blackmarket and 25% official rates) would be fine.
As you can see from the picture above 200,000soms is a ridiculous wedge. At first it seems that the Uzbek central bank have taken their currency issuance philosophy from the wiemar republic, favouring a doorstop of notes where one piece of well crafted paper would do the job nicely. It doesn’t take an economics graduate to see that they could make things easier for themselves and everyone else by printing more valuable notes- the 1,000som note worth roughly $.50 is the biggest available. It would also help their accounts, increasing what economists call seigniorage On the other hand, if they did that the Uzbek men wouldn’t be such good money counters, they all count with a bookie’s flair. Even worse, they wouldn’t be able to look like big sugar daddies when they peel off their wodge to pay the $6 for their family’s meal out.
But it is high inflation that leads to a cycle tourist sitting in a room swapping one American note for 200 Uzbek notes with a cleaning lady. After the “deal” I naively asked if she was planning a trip. She laughed and explained that these were her savings; as inflation is so bad, (a quick google trawl suggests around 20% in 2008) people hold their cash in dollars, exchanging them into soms when needed. That way they are not hit too hard when the real value of their country’s currency drops, minimising what economists call the cost of carry.
Its not that $100 or 200,000som is an enormous amount of cash here, though it does represent an ok monthly wage. In the city of Tashkent however, the skies the limit, my exchanger had a friend who had a friend who was earning $1,000 a month. “A $1,000 a month” she said again incredulously. I blushed and thanked her, feeling like a decadent European as walked back to my $5 dollar a night bed to stuff my face with a dollar’s worth of pastries for breakfast.
$1,000 a month- can you imagine that?
The world seems like an especially complicated, unfair, and crazy place if you think about money and exchange, and try and compare here with there and understand why.