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Written by Kava Economist
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KAVA & THE "ALMIGHTY" U.S. DOLLAR
Well, it's time for a quick lecture on kava economics peeps. I had to pay for a shipment of kava last week coming from the Republic of Vanuatu and I got a great surprise. As you can all imagine, U.S. dollars are not used in Vanuatu for currency and we do not pay for kava in U.S. dollars either. I know it is hard to fathom this but if you ever travel to Vanuatu you cannot spend a U.S. dollar anywhere, no one will take them. You have to first transfer your money into Vatu, the local currency in Vanuatu. Now the Vatu is not the strongest currency in the world either but the value of the U.S. dollar has remained pretty solid since 2000 when we started buying kava. I remember that the value of the U.S. Dollar was 115 Vatu to one on my trip there in 2004. By the time I had returned again in 2006 the value had dropped down to 108 to one. When I wired money there last week I was informed that my money transferred at 92 Vatu to one U.S. dollar. In short, this is causing the price of the kava to rise because we are losing money in the transfer of the currencies. The price of the kava remains high, but unchanged in Vanuatu as of this time. We will have to raise the price of the Vanuatu kava (and the PNG and Tongan as well because the same thing is happening in those places) to compensate for this drop in the U.S. dollar. Hopefully the economic situation in the U.S. will improve soon and the dollar value will go back up again and we will lower the price of Vanuatu kava accordingly at that time.
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Last Updated ( Sunday, 03 August 2008 )
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