Funny Money

I know next to nothing about the rules that govern foreign currency, but as we’ve trekked farther south I’ve noticed something odd. The denominations keep increasing. In the U.S., a bottle of water costs about $1.50. In Mexico, it’s maybe 15 pesos. In Honduras, the price of a bottle of water increases to around 50 lempira, and in what is technically Colombia we are paying 1,500 pesos. I’m estimating here on the price of water, but you get what I’m saying. 

It’s somewhat disconcerting to take out 300,000 of anything in a single ATM run, and at this point I’m lost in this currency jungle, a problem excacerbated by the fact that “mil” is the Spanish word for “thousand.” It sounds like the cashier at the grocery store is asking for 50 million pesos for our weekly stock up, and my heart almost stops until I remember that mil is in fact a thousand and 50,000 pesos is the equivalent of about $30.

I would like to know how this happens exactly. Is it just inflation? Did someone at the central bank think the money would have more panache with a couple of extra zeros attached? And can’t they just lop off a few because the system becomes kind of cumbersome? To make matters even more interesting, Panama uses the U.S. dollar for all its transactions, but the change they give you is a mixture of American and Panamanian coinage. I'm never going to figure this out.