Using Local Currency in a Foreign Country

Planning on traveling or living abroad? Then get your calculator out (or start reviewing your third grade math homework), because it’s time to use foreign currency!


Photo courtesy of dcmaster via Compfight cc

Using the local currency is one of my favorite things about visiting other countries. Maybe it’s because I don’t handle cash a lot in my home country, or maybe it’s simply because I enjoy getting to see the country’s culture reflected in their currency. When I was a kid, I also enjoyed collecting stamps from foreign countries, so maybe I just have a weird fascination with foreign things in general!

Before I moved to Asia four years ago, I didn’t really have to think too hard about money. Oh sure, I had a budget and tried my best to stay within that budget…but there wasn’t too much else to consider. Either I had enough money to spend or I didn’t. Then I made the leap to this side of the globe and quickly realized things were a little different.

As foreigners, there are a couple obvious, yet important adjustments we need to make when it comes to money.

For instance, we need to know the exchange rate. I remember walking into a Hong Kong grocery store for the very first time and wondering why a bag of chips cost $20. I was thinking in USD as opposed to HKD. It took me a few days before I started converting prices automatically in my head. (In case you’re wondering, that bag of chips would have cost less than 3 USD).

When traveling to a country where the local currency is weaker than your own country, the first thing that we foreigners need to realize is that things do not cost as much as they appear. Seeing a 6 RMB price tag here in China, for instance, is actually only 1 USD.

But the longer we live in that foreign country, the easier it is to assume that something is “cheap” when in fact it is not. This is a really easy assumption that we expats living in China can make because so many things are comparatively inexpensive here. From food to rent, we often feel that we’re getting a bargain deal.

But if we stop making the mental calculations, we will forget that for many items we’ll pay the same (or even greater) amount that we’d pay in our home countries. For instances, vegetables here are relatively cheap, but fruit costs about the same as it does the U.S. or Canada.

One thing we don’t necessarily anticipate is that we may have to make most of our purchases with cash. In most Western nations, we’re used to cashless transactions. For some of us, we only use our debit or credit cards. But when traveling abroad, you can easily run into international transaction fees when using your bank cards.

In China, I pay for almost everything with cash.

For the most part, paying with cash is no problem. You may have no idea whose hands have been all over the bills and coins you’re handling, but the good thing is that you’re eventually going to exchange it all for something better anyway!

However, when it comes to bigger expenses (such as one semester’s worth of tuition or one year’s worth of rent), a slight problem arises. China’s largest banknote is 100 RMB (currently worth about 16 USD). As a result, it’s often a necessity to carry large wads of bills whenever you have to make a big payment. It’s during those moments that you sometimes wish you had a bodyguard with you!

Because I don’t use bank cards here, it requires some forethought before I step out the door. If I plan to buy groceries or pay for our utility bills, I need to make sure I bring enough cash with me. Also, if I plan on taking a bus or a taxi, I must have (or acquire via a small convenience store) some ι›Άι’± (ling qian – small change).

Though I sometimes miss the convenience of paying with my debit or credit card (and will probably use them exclusively the next time I’m back in North America), I think it makes my life here more interesting overall. If nothing else, it’s a great opportunity to practice my numbers with the local market sellers…it certainly gives them something to laugh about when I hand over way too much money.

Do you like using foreign currency when traveling or living abroad? What have you experienced when buying things in a foreign country?

15 thoughts on “Using Local Currency in a Foreign Country

  1. I am really bad with e money when it comes to China. I really hate it to walk around with a bag packed with 100RMB notes when I want to buy something a bit more expensive. After a few weeks in China I always get the feeling that everything is so cheap, even though it is not.
    This is the good thing about the European Union and the Euro. Most countries in the Union have by now the Euro and there you can easily see what are “cheap” countries and which are “expensive”. For example Germany appears to be a cheap country when coming from Finland as everything is suddenly only half price or sometimes even only 1/10th of the price!! But then again germany is so much more expensive then other Easter European countries which have the euro now, what a confusing world for a person such as me who hates numbers πŸ™‚

    • Yep, don’t let the RMB fool you! Some things are cheap here, but other things are not. Like if you want to major appliances, such as air conditioners, fridges, and the like, those are gonna cost you an arm and a leg. Actually most electronics in China aren’t super cheap…or if they are, it’s really low quality. πŸ˜›

      It seems to me that Scandinavian countries have super high prices… I was talking to a Norwegian friend of mine, and he was telling me that no one goes out to eat because it’s too expensive. Of course, it’s partially offset by the relatively higher incomes. Is that also true of Finland?

      • Depending on what organization is doing studies about income the result varies. Most studies indicate that the average income in Finland is just slightly higher than in Greece and thus far below the average of the European Union while other studies state that the income is bit higher than in Germany. Well, from what I know after living for seven years is that all my friends earn far less than they would in Germany, one person who is a high ranked manager in his company earns 60k euros a year while his peers from the same company in Germany earn 350k euros a year! Plus the sick taxation in Finland, oh dear, it is really sad there these days and yes, many people also don’t go eating there because of the high prices (Pizza Hut medium pizza is 28euos or something while in Germany only 11)

  2. I have lived in China for a few years now so I don’t really compare prices with Spain anymore! But when I go to other Asian countries what happens is… as I have no idea how much is in fact the price I’m seeing, I tend to think that everything is cheap and end up spending a lot of money haha.

    It is so annoying that the largest backnote in China is 100 RMB. When I had to pay the tuition fee in Beijing and handed a bag of money I felt as if I just robbed a bank haha. I read somewhere they were thinking about making a 500 RMB note, that would help but I’m not sure if they are seriously considering it.

    • Haha, it’s the same with me when I’m in other Asian countries. In Korea, it seemed like everything was about the same price as I’d pay back home.

      I don’t know why China doesn’t make 500 or even 1000 RMB banknotes, but I would guess that part of the reason is due to the risk of forgery. Every time I hand a sales clerk in a big grocery store, they will ALWAYS examine it briefly before accepting it. Apparently, counterfeiting money is a big deal here, so it would make sense that keeping bank notes at 100 RMB would decrease the incentive for counterfeiters.

      Also, 100 RMB to a Chinese person is probably worth a lot more to them than it is worth to us.

      • They do have a huge problem with counterfeit money, I’ve heard that even ATMs can give you fake money!! Luckily that never happened to me. (And recently I discovered that when you withdraw money from an ATM you can print a slip with all the notes’ serial numbers. At least in Bank of China ATM’s. Dunno if it’s useful but I will always print it from now on!).

        There are a lot of rich Chinese people nowadays. Think of all the businessmen who have to pay dinners or KTV nights, or the taitais that go shopping with their husbands’ B money! In Europe we have 500 Euro notes (around 4,000 RMB!) and no one uses them but well, we have them just in case! πŸ˜€

  3. Another very thoughtful post from you. I almost missed this one due to getting caught up with life and work πŸ˜›

    The currency in Malaysia is weak compared to Australia and the States, and when I go back for a holiday here I have to tell myself to stop buying too many clothes and useless knick-knacks. Yes, things are cheaper in Malaysia compared to Melbourne and I pay cash wherever I go (though credit cards are common here). Carrying a thick wad of cash around, I feel like I’m rich – and so have no problem pulling out notes and spending them. As they saying goes, “cash is king” πŸ˜€

    As foreigners, things in the foreign country may seem cheap to us. To locals, this is usually the opposite as their salaries tend to be much lower than ours. Cost of living is on par or below par with what they earn. Which is why sometimes we can be a millionaire in the country we travel too.

    • Thanks for taking a break from life and work to leave a comment. πŸ˜‰ It’s greatly appreciated!

      Good point you raise about living costs in foreign countries. It’s quite normal for a married person here, for instance, to live off of 2000-3000 RMB per month (less than 500 USD/month).

      And yes, we can definitely feel like millionaires in other countries… hello Thailand? πŸ˜€

      • In some parts of Asia, you still can get a decent dinner for $2 USD. To the locals, this is a lot of money. It’s sad, but that’s reality.

        In Indonesia, USD currency is accepted in the shops – e.g. high boutique malls, grocery shops. I’m not sure if this is specific to the places I’ve been in Indonesia, and if other parts of Asia follows suit.

  4. Luckily for me I have a Chinese account with a Union Pay card to use in larger stores, so I don’t have to carry too much cash around. But I still actually carry more than I would at home (which would usually be about Β£5 haha!) because there are still plenty of places I need to use cash (smaller shops and restaurants, taxis, subway etc). For some reason I always mentally change RMB into Β£. I don’t now why- I don’t do that in other countries I’ve lived, worked or travelled in. I think it’s because we also say it’s Β£1 to 10 rmb (which actually it is not right now it’s only 9 point something rmb) so I just adjust the 0s. I know loads of British people that do that here and it’s really silly!

    • How convenient! Was it pretty easy for you to get set up with a Union Pay card?

      I think it’s great that you mentally convert RMB to Β£. At the very least, it helps you keep track of what items are “cheap” and which ones you should just by when you’re back home (or somewhere else in Asia). I usually divide prices here by 5 to get the Canadian dollar equivalent (even though it’s more like 5.1 or 5.2, down from 5.5 only a year ago).

    • Oh yeah, I keep mixing up the 1 mao coins with the 1 kuai coins. But occassionally I’ll pull a bunch of them out and try to spend them (usually on bus fares or bottled water). πŸ˜€

  5. well, actually cheap or not is not only from the perspective of what the foreign currency did within your own country currency, but how much you had within you…
    for a chinese tycoon, purchasing a lamborghini is like we were much talking buying a pack of tofu, no matter it’s on USD, IDR, or even GBP

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