I remember the good old days, when I first arrived here and was so blissfully thrilled with the exchange rate. It only got better, with a 2.3 RON = $1 reaching 3.2 RON=$1 within months (despite the US's financial, economic issues, in unstable times, people run to quality, and invested their money in the Euro and the US dollar. We're still pathetic compared to the Euro, but relative to other currencies, the dollar has increased in value).
I've since adapted to thinking in RON, and have gained a new comprehension and sympathy for the plight of developing countries whose currencies are tied to the floating exchange rate and not the gold standard. In the 90's, the Southeast Asian countries were reaching peaks of economic growth, investors pouring in money, the currency achieving a high value. Suddenly, signs of weakness led to rapid withdrawal of investment. Money lost value overnight, crumbling the currency and economy. Similarly, in the last months, Romania, but especially Ukraine have currencies that have lost value. The Ukrainian currency has lost half its value. This is cruel in countries like Romania, Poland, Ukraine, where people make contracts and long term commitments in the more stable Euro. When their earnings lose 20%-50% of their value relative to the Euro, it puts an additional financial strain on them that Europeans and Americans at least don't have to deal with.
I have always felt that life here was cheap. However, if I consider the RON to have the same buying power here as a dollar in the US, it becomes apparent how expensive it is to live here. The AVERAGE income is 300 Euros a month. An entry level professor earns 1000 RON a month, something like $310, or 250 Euros. With this, they have to pay rent in Cluj, where it is hard to find apartments for under 250 Euros a month. Milk costs 3.10 RON per liter, a pound of chicken is roughly 7 RON. For me to buy supplies for a meal for two, assuming a few leftovers for lunch the next day, I could easily spend 20 RON to 30 RON.
At least cigarettes and beer are cheap- 4 RON a pack and 6 RON (yes, less than $2) for 2 liters.
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Variation in exchange rates caused a great deal of difficulty to any business that was required to price in Euro but pay in Lei, tourism for example. Pricing was a nightmare, and more effort by the government to ensure a measure of stability would have been welcome. Increasing prices to give a measure of security (brochure prices being set up to a year in advance) only served to make those prices less competitive. It was something of a no win situation.
I used to see loans offered in Swiss Francs as well as Euro. At one point these seemed like a good deal. But now, when one's Lei buy far fewer Euro or Francs, it's a different story. Especially when property prices were inflated in the first place. Are many people defaulting on their loans now?
I don't know about loan defaults. It seems like people here are both concerned about the "criza" yet also totally skeptical of it. They seem to think that it is some conspiracy by the Americans or something. I do see a lot of cars for sale though, it seems people have to trade down their VW or Beemer for something a little more modest.
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