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(EMAILWIRE.COM, December 04, 2008 ) HONG KONG – Recent exchange rate fluctuations resulting from this year’s economic crisis are having a major impact on the cost of living for expatriates, according to ECA International, the world's leading knowledge and solutions provider for international human resources professionals.
Exchange rates - big movements up and down
The recent rebound of the US dollar against other major currencies has seen locations in the US, and in countries, such as Hong Kong, where currencies are tied to the greenback, all become more expensive for visitors.
The strengthening of the Japanese yen due largely to the unravelling of the carry trade means Tokyo has reclaimed its position as AsiaÂ’s most expensive city for visitors. Goods and services there were 40% more expensive than in Singapore in September 2007, and this gap has since widened to 68%. While inflation has tripled since last year, increases in cost of living over the last two months for foreigners coming to Japan have been primarily a result of exchange rate movements.
“Earlier this year we reported falling costs of living in Hong Kong as the currency depreciated. Now we see this trend is reversed. In the last two months, goods and services in Hong Kong have swung from being 10 per cent cheaper than in London, to being almost 10 per cent more expensive,” explains Lee Quane, General Manager – Asia, at ECA International.
“The impact of this reversal is threatening to put the brakes on the local economy by making the city more expensive for visitors and raising the cost of business for overseas firms headquartered here,” said Quane.
Global economic events have seen world exchange rates fluctuating dramatically over the last two months. Depending on their salary calculation methodology, many companies will have to pay particularly close attention to these movements in order to apply appropriate cost of living indices to the remuneration packages of their international assignees.
Living costs for expatriates are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on expatriate remuneration packages. To help multinational companies calculate assignment salaries, ECA carries out a Cost of Living Survey twice a year comparing a basket of 125 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide.
Asia highlights
Locations in China have also become more expensive. Beijing, the most expensive Chinese city for expatriates, is now more costly than Hong Kong for the first time ever. The cost of living in Hong Kong, Singapore and Taipei has also increased for visitors over the course of the past year due to a combination of inflation and currency movements.
“Beijing’s movement has been driven by both the strength of the Renminbi and persistent inflation, which we have also seen in other Chinese locations. While the largest cause of changes worldwide in the cost of living in recent months has been exchange rates, inflationary pressures have continued to contribute to the cost of living rises we have witnessed in many locations,” said Quane.
Korean locations have seen the largest relative decrease in cost of living for visitors and this is due to the depreciation of the Korean Won, which has fallen by more than 48 per cent between September 2007 and November 2008 against the US dollar. Goods and services in Seoul were 5 per cent more expensive than Tokyo in September 2007, whereas they are now 40 per cent cheaper.
“This example of currency fluctuation underlines the importance for multinational organisations of managing the salaries of their international assignees very carefully,” adds Quane. “Our research shows that the majority of companies pay their expatriate staff in their home currency whilst on assignment. This means that the staff of a Korean company posted to Japan will have seen their purchasing power reduce drastically over the past two months. Companies which split pay between the employee’s home and host countries will be much better equipped to ride out the current currency volatility.”
A weakened rupee has also meant that cost of living for expatriates in Indian locations has fallen to below what it was a year ago. Despite higher inflation, the cost of living in Jakarta and Bangkok has also fallen below last yearÂ’s levels, particularly over the last two months as their currencies weakened sharply against the dollar.
Islamabad is the cheapest location in Asia, with goods and services costing approximately 70 per cent less there than in Japan.
Worldwide highlights
The weakening of sterling as the UK economy has declined means that Central London, like Seoul, is now conspicuously absent from the top ten most expensive cities. Paris, Munich, Amsterdam and Brussels are currently more expensive than the British capital. Equally, locations in the US, including New York and Washington, are more costly than a trip to UK locations.
Moscow is the most expensive European location, replacing Oslo where current international economic conditions, and particularly the fall in oil prices, have resulted in a weakened Norwegian Krone.
The biggest rise in cost of living since September 2007 has been for people heading to Caracas where inflation of over 40 per cent coupled with a redenominated and stronger currency, have made goods and services 28 per cent more expensive there now for expatriates and visitors than in September 2007.
Despite the Australian and New Zealand currencies rallying earlier in the year, falls in commodity prices and the unwinding of the carry trade have contributed to the depreciation of their currencies in recent months. This has made their relative cost of living decline in comparison with last year.
Other movements of particular note have been seen in Brazil, Hungary, Poland and Turkey where currencies have swung from strong to weak in just a few months. A drop in demand for commodities has contributed to the Brazilian real weakening by around 37 per cent since September while huge government debt in Hungary has undermined the previously overpriced florint. Investors pulling out of the more risky emerging markets have been a factor in the recent weakening of the Polish zloty and the Turkish lira.
Africa remains home to the surveyÂ’s most and least expensive locations. The Angolan capital, Luanda, holds its position as the most expensive location in the world for foreigners. Certain items and brands typically purchased by expatriates can be very expensive in a location such as this where they are not readily available locally. Maseru in Lesotho is the cheapest location in the world for visitors.
Cost of Living
ECAÂ’s cost of living data compares a basket of 125 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide. The data is used by ECA Member companies to calculate cost of living allowances for expatriates. The survey covers:
Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables
Basic: Drink and tobacco; miscellaneous goods; services
General: Clothing; electrical goods; motoring; meals out
Notes to Editors
Figures used in this release were taken from ECAÂ’s Cost of Living Survey:
About ECAÂ’s Cost of Living Survey
ECA InternationalÂ’s cost of living indices are calculated based upon surveys carried out annually in March and September using a basket of day-to-day goods and services. November exchange rates have been used.
Certain living costs such as accommodation, utilities (electricity, gas, water costs), car purchase and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.
This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons, and different levels of shopping efficiency.
About ECA International (www.eca-international.com)
ECA International is the worldÂ’s largest membership organisation for international human resources professionals, serving a global network of over 4000 HR professionals in 71 countries. The leading provider of online data, software solutions and advice for more than 1500 international companies, ECAÂ’s innovative approach has been providing cost-effective solutions to international HR management since 1971.
ECAÂ’s services cover: cost of living indices, accommodation and benefits, expatriate and local remuneration, tax, social security and labour legislation, international assignment packages, daily business expenses rates and consultancy specialising in international HR policies.
Issued on behalf of ECA International by EBA Communications
For more information, please contact:
Lee Quane
ECA International
Mobile: +852 9330 2750
Email: lee.quane@eca-international.com
###
This press release was issued through GroupWeb EmailWire.Com. For more information on unlimited press release distribution for $99 per month, go to http://www.emailwire.com.
ECA International
Lee Quane
+852 9330 2750
ee.quane@eca-international.com 
(EMAILWIRE.COM, December 04, 2008 ) HONG KONG – Recent exchange rate fluctuations resulting from this year’s economic crisis are having a major impact on the cost of living for expatriates, according to ECA International, the world's leading knowledge and solutions provider for international human resources professionals.
Exchange rates - big movements up and down
The recent rebound of the US dollar against other major currencies has seen locations in the US, and in countries, such as Hong Kong, where currencies are tied to the greenback, all become more expensive for visitors.
The strengthening of the Japanese yen due largely to the unravelling of the carry trade means Tokyo has reclaimed its position as AsiaÂ’s most expensive city for visitors. Goods and services there were 40% more expensive than in Singapore in September 2007, and this gap has since widened to 68%. While inflation has tripled since last year, increases in cost of living over the last two months for foreigners coming to Japan have been primarily a result of exchange rate movements.
“Earlier this year we reported falling costs of living in Hong Kong as the currency depreciated. Now we see this trend is reversed. In the last two months, goods and services in Hong Kong have swung from being 10 per cent cheaper than in London, to being almost 10 per cent more expensive,” explains Lee Quane, General Manager – Asia, at ECA International.
“The impact of this reversal is threatening to put the brakes on the local economy by making the city more expensive for visitors and raising the cost of business for overseas firms headquartered here,” said Quane.
Global economic events have seen world exchange rates fluctuating dramatically over the last two months. Depending on their salary calculation methodology, many companies will have to pay particularly close attention to these movements in order to apply appropriate cost of living indices to the remuneration packages of their international assignees.
Living costs for expatriates are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on expatriate remuneration packages. To help multinational companies calculate assignment salaries, ECA carries out a Cost of Living Survey twice a year comparing a basket of 125 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide.
Asia highlights
Locations in China have also become more expensive. Beijing, the most expensive Chinese city for expatriates, is now more costly than Hong Kong for the first time ever. The cost of living in Hong Kong, Singapore and Taipei has also increased for visitors over the course of the past year due to a combination of inflation and currency movements.
“Beijing’s movement has been driven by both the strength of the Renminbi and persistent inflation, which we have also seen in other Chinese locations. While the largest cause of changes worldwide in the cost of living in recent months has been exchange rates, inflationary pressures have continued to contribute to the cost of living rises we have witnessed in many locations,” said Quane.
Korean locations have seen the largest relative decrease in cost of living for visitors and this is due to the depreciation of the Korean Won, which has fallen by more than 48 per cent between September 2007 and November 2008 against the US dollar. Goods and services in Seoul were 5 per cent more expensive than Tokyo in September 2007, whereas they are now 40 per cent cheaper.
“This example of currency fluctuation underlines the importance for multinational organisations of managing the salaries of their international assignees very carefully,” adds Quane. “Our research shows that the majority of companies pay their expatriate staff in their home currency whilst on assignment. This means that the staff of a Korean company posted to Japan will have seen their purchasing power reduce drastically over the past two months. Companies which split pay between the employee’s home and host countries will be much better equipped to ride out the current currency volatility.”
A weakened rupee has also meant that cost of living for expatriates in Indian locations has fallen to below what it was a year ago. Despite higher inflation, the cost of living in Jakarta and Bangkok has also fallen below last yearÂ’s levels, particularly over the last two months as their currencies weakened sharply against the dollar.
Islamabad is the cheapest location in Asia, with goods and services costing approximately 70 per cent less there than in Japan.
Worldwide highlights
The weakening of sterling as the UK economy has declined means that Central London, like Seoul, is now conspicuously absent from the top ten most expensive cities. Paris, Munich, Amsterdam and Brussels are currently more expensive than the British capital. Equally, locations in the US, including New York and Washington, are more costly than a trip to UK locations.
Moscow is the most expensive European location, replacing Oslo where current international economic conditions, and particularly the fall in oil prices, have resulted in a weakened Norwegian Krone.
The biggest rise in cost of living since September 2007 has been for people heading to Caracas where inflation of over 40 per cent coupled with a redenominated and stronger currency, have made goods and services 28 per cent more expensive there now for expatriates and visitors than in September 2007.
Despite the Australian and New Zealand currencies rallying earlier in the year, falls in commodity prices and the unwinding of the carry trade have contributed to the depreciation of their currencies in recent months. This has made their relative cost of living decline in comparison with last year.
Other movements of particular note have been seen in Brazil, Hungary, Poland and Turkey where currencies have swung from strong to weak in just a few months. A drop in demand for commodities has contributed to the Brazilian real weakening by around 37 per cent since September while huge government debt in Hungary has undermined the previously overpriced florint. Investors pulling out of the more risky emerging markets have been a factor in the recent weakening of the Polish zloty and the Turkish lira.
Africa remains home to the surveyÂ’s most and least expensive locations. The Angolan capital, Luanda, holds its position as the most expensive location in the world for foreigners. Certain items and brands typically purchased by expatriates can be very expensive in a location such as this where they are not readily available locally. Maseru in Lesotho is the cheapest location in the world for visitors.
Cost of Living
ECAÂ’s cost of living data compares a basket of 125 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide. The data is used by ECA Member companies to calculate cost of living allowances for expatriates. The survey covers:
Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables
Basic: Drink and tobacco; miscellaneous goods; services
General: Clothing; electrical goods; motoring; meals out
Notes to Editors
Figures used in this release were taken from ECAÂ’s Cost of Living Survey:
About ECAÂ’s Cost of Living Survey
ECA InternationalÂ’s cost of living indices are calculated based upon surveys carried out annually in March and September using a basket of day-to-day goods and services. November exchange rates have been used.
Certain living costs such as accommodation, utilities (electricity, gas, water costs), car purchase and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.
This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons, and different levels of shopping efficiency.
About ECA International (www.eca-international.com)
ECA International is the worldÂ’s largest membership organisation for international human resources professionals, serving a global network of over 4000 HR professionals in 71 countries. The leading provider of online data, software solutions and advice for more than 1500 international companies, ECAÂ’s innovative approach has been providing cost-effective solutions to international HR management since 1971.
ECAÂ’s services cover: cost of living indices, accommodation and benefits, expatriate and local remuneration, tax, social security and labour legislation, international assignment packages, daily business expenses rates and consultancy specialising in international HR policies.
Issued on behalf of ECA International by EBA Communications
For more information, please contact:
Lee Quane
ECA International
Mobile: +852 9330 2750
Email: lee.quane@eca-international.com
###
This press release was issued through GroupWeb EmailWire.Com. For more information on unlimited press release distribution for $99 per month, go to http://www.emailwire.com.
ECA International
Lee Quane
+852 9330 2750
ee.quane@eca-international.com
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