Posted by: patenttranslator | November 9, 2012

Translators and Foreign Exchange Fluctuations – Not Exactly a Love Story

Many freelance translators are affected by fluctuations of foreign currencies at least as much as major multinational corporations because most of us work these days at least occasionally for clients abroad, regardless of where we live.

For translators who live in the United States, it has been a bumpy ride, mostly in the downward direction since the Euro has been introduced in 1999. The Euro was first used only as an invisible currency until in 2002 Europeans in 12 countries started using it as cash.

I remember that I was reading sometime in 2002 a typically arrogant American editorial in my local paper (Virginian Pilot) mocking the Euro and predicting its ultimate demise within a few years.

Well, that is not exactly what happened, is it? When the Euro was first introduced, it was worth about 70 cents in US dollars. After it started slowly appreciating in the initial years, the exchange rate as of today is 1.2723 US dollars to 1 Euro. I remember that it was about 1.4 Euros to a dollar a couple of years ago. Even now as the European Union is facing its deepest crisis since it was established and its very existence seems to be threatened, the Euro is worth almost twice as much as it was at its introduction. The US dollar seems to have lost its golden glow.

Long-term fluctuations of other currencies are just as impressive as the fight of the Euro versus the US dollar.

Shortly before I moved from San Francisco to Tokyo in 1985, the dollar was worth about 300 Japanese yen. Within a couple of years, it was worth about 200 yen, and the exchange rate as of today is 79.340 Japanese yen to 1 US dollar, although Japan is facing a deep economic crisis at this point. In fact, Japan has been in full crisis mode since the nineties, and the Fukushima disaster a year ago must have been another serious blow to Japanese economy and psyche. Japan seems to be besieged by seemingly insurmountable problems on many fronts these days as its aging population is not being replaced by new births (1 in 4 persons in Japan is over 65 years of age), Japanese Prime Ministers keep resigning, and famous and once invincible Japanese manufacturers are losing their dominance in electronic and other products to their competitors in Korea and China. Although the yen is an extremely strong currency at this point, Japanese tourists seem to have disappeared from Europe as I wrote in this post, or rather have been replaced by Chinese tourists.

While almost 100 percent of my income has been derived from Japanese translations for about 20 years, mostly translations of Japanese patents, I would probably be in serious trouble if I had to depend only on Japanese translations today. Most months 30 to 60 percent of patents and other materials that I translate to English are in German, French, Russian and other European languages, and I noticed that the demand for translation of Chinese patents is strong, in contrast to a falling demand for translation of Japanese patents. I should have continued learning Chinese when I was young, but I chickened out after a while because I found the rising and falling tones of Chinese really scary.

Because I often travel to Czech Republic, I have been following the fluctuations of the dollar versus the Czech crown as well. I remember that around 1996, 1 US dollar was worth 38 Czech crowns. I was a pretty rich American tourist in Prague back then. Alas, it was not to last. I remember that when I was exchanging dollars for crowns at the Prague airport four years ago as I needed money for a taxi, they gave me 13 crowns to a dollar. The man in the foreign currency exchange booth was looking at me quizzically as if wondering whether I would start protesting. I pretended that I did not care. The dollar has improved somewhat, it is now almost 20 Czech crowns to 1 US dollar. At least it’s easy to calculate the prices in dollars in my head.

The Swiss franc keeps hitting “record levels” year after year, and the Canadian and Australian dollar are at virtual parity with US dollar or higher, although a few years ago they were worth about 30 percent less, and so on and so forth.

It’s a mess out there. What is going on? I wish I had a clue. My working theory is that something big is going on and just like me, nobody really has a clue either. The Swiss franc and the Japanese yen are so high because everybody is trying to find a safe haven for money that is not tied to US dollar or to the Euro. But if this is the only reason why these currencies have appreciated so much, which seems to be the case, they could crash just as easily as the dollar did.

Since the foreign exchange trends seem to have nothing to do with the economic or political situation of a given country (Japan would be a prime example), and everything to do with quite unpredictable trends driven by foreign exchange market speculators, my advice to translators would be to always quote prices in their country’s currency whenever possible, or the currency to which their local currency is pegged, for instance in Euros if you live in Czech Republic, in order to minimize the risk.

The one currency that does not fluctuate as much as dollars and Euros is the currency of knowledge that is stored in our head.

Even if the something that is going and that nobody can figure out is a big crash of everything, similar to Big Bang, which is quite possible, I am betting that knowledge of foreign languages and the ability to translate will be still quite a valuable currency when the pecking order of foreign exchange currencies is rearranged again after the next Economic Big Bang.

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Responses

  1. ‘It’s a mess out there. What is going on? I wish I had a clue. My working theory is that something big is going on and just like me, nobody really has a clue either.’

    Totally agree. Maybe the people who are buying gold know something – but they’re not telling…

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  2. Well, they know that while the supply of gold is extremely limited, as you keep printing money in any currency now that money is not tied to gold anymore, the same money will probably be worth less tomorrow.

    I know that too but I don’t have any money left over to buy gold once my bills are paid.

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    • I have some savings – if converted to gold I think they should make a small coin. Well, at least it would be easy to carry and hide 😉

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  3. I find myself in the odd position of wishing the euro project would collapse (I think it’s doomed in the long run unless Europe becomes a federal superstate, which I’m opposed to) while wanting the euro to be strong, because about 90% of my income is in euros, and when I convert it into sterling I get more pounds when the euro is strong.

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  4. But if Euro collapsed, you would be paid in different currencies depending on the country where your customer is based.

    If the French go back to a weak franc and the pound is strong, you will have to learn German or Chinese or something like that, unless you can find enough customers in la Suisse romande, provided that the Swiss franc remains strong once all the American and European tax cheats have been flushed out from Swiss banks.

    (I use this just as an example showing how complicated and precarious our situation is).

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    • That’s exactly my point: politically, I would like the euro to collapse, but from the point of view of my own economic reality, I very much want it to succeed. And yes, “complicated and precarious” just about sums it up.

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  5. pěknej článek…

    Like

  6. Do you remember what and why Jesus did to the money changers, Steve, when he first came to the Temple after a long journey from Galilee to Jerusalem?

    I wish someone among us would do it again, instead of having the ambivalent feeling about US Dollar or Euro.

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  7. I remember, Jesus overturned their tables.

    I also remember that our government bailed them out to preserve their ill gotten profits after their fraudulent gambling bankrupted the world’s economy.

    I think that most people still remember it. The thing is, what can they do about it? The motto on our currency that says “IN GOD WE TRUST” should be changed to “WALL STREET CROOKS WE OBEY AND BAIL OUT”.

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  8. ROE is but another fact of life for me. The Uru peso, or rather the economy, is more or less pegged to the US dollar, and this is something you factor in since way back when.
    But since there is nothing I can do about it but keep it in mind for my calculations, what I want to say now is thank you for sharing the rock videos, they took me back to my teen years (looooong gone…) 🙂

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  9. You mean you were a teenager in the fifties when you used to dance just like the crazy Americans in the black-and-white music video of this post?

    Like


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