Updating Overseas COLA Rates
The Per Diem Committee in the Defense Finance Accounting Service monitors the exchange rates between local currency and US currency throughout the year. Changes to an area's COLA are made along with changes to the exchange rate to maintain your purchasing power overseas.
The committee adjusts the COLA rate as often as possible and can even adjust it every day. These changes, however, will not have an immediate impact on your paycheck. It takes time for the Department and Defense Finance and Accounting Service to chart currency movements, set the COLA, and then distribute the money via payrolls.
In other words, the COLA rate is always playing catch up with the dollar's movement in value against other currencies. On the reverse side of it, if the dollar rebounds, it will again take some time for servicemembers to see a reduction in their COLA.
In the short term, servicemembers may see big fluctuations in the US dollar's buying power. But over time, COLA adjustments will offset those changes and a servicemember's purchasing power will remain steady.
Read more about this topic: Cost Of Living Allowance (U.S. Military)
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