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How Worldwide Economies Affect My Personal Finances

When considering the currency markets and worldwide banking, many people don’t fully understand how tightly interconnected everything is in our global economy. The recent occurrences in Cyprus have highlighted this to me most dramatically.

Here I am…an American citizen living in Thailand. What possible connection could I have to the banking industry in Cyprus and how could the current problems in that small country possibly affect me?

Now, you might think that this is because I was trading forex through a company based in Cyprus, but that’s not the case. All my forex accounts are still in demo, though I am almost ready to start testing a system in a mini account (more on that later).

No, this is something that caught me completely unawares and had nothing to do with forex trading, though it was tied to a company that works in the financial markets field.

What happened is that I write market updates for a company based in Israel. Yes, these include forex related musings, but the company is not a forex company. And as far as I knew they were not based in Cyprus.

Ah, but it turns out that their bank is based in Cyprus. And the issue with them began last week, when I would have normally expected my payment for work done in February. Typically the invoiced amount is paid via wire transfer to my bank, which has been acceptable in the past, if a bit slower than alternatives such as Paypal.

Well, this month the payment didn’t come through on time. I wrote to the accounts payable people at the company and they said they would look into it. Several days passed and I was finally able to determine from them that the payment had been made and should be received by me soon (there was a weekend following the payment date and I assumed that was delaying the posting of the funds). After 3 business days I still had not received the funds, and this seemed to be strange. I wrote to the accounts payable folks again asking for correspondent bank information and a tracking number for the transfer. It was at this point that I received an email back from the CFO of the company explaining what had happened. The payment had been made as usual, but before it could be transferred the Cyprus bank levy decision had been made and the banks put on a mandatory holiday.

At this point I am still waiting for the funds and will likely wait until next week at the earliest. Although the banks in Cyprus were meant to reopen Thursday it seems there is some question whether or not they will do so since the Parliament in Cyprus has refused to accept the bank levy imposed on them as part of the proposed bailout package. In fact, there is a chance the banks will remained closed until Cypriot and EU leaders can come to a consensus on how to handle the bailout of Cyprus.

So, it seems that even a lowly freelance writer and blogger such as myself can be affected by world financial markets. While I’m fairly certain nothing like this could ever happen with U.S. banks, it doesn’t hurt to be diversified internationally. I’m also finding that out as the currency here in Thailand continues to strengthen considerably against the U.S. dollar. Where I was receiving 33 Thai Baht per U.S. Dollar when we arrived in Thailand less than 2 years ago, the exchange rate is now down to nearly 29 Thai baht per U.S. Dollar, a drop of over 10 percent. I certainly hope that trend will reverse itself soon, though I think we can weather the change as long as the exchange rate doesn’t drop by another 10-15 percent. If it does, we may need to reconsider living in Thailand as it will no longer be cheap or even on par with costs in the U.S. Honestly at 29 Thai baht to the Dollar it isn’t particularly cheap now.

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