LifeinAsia - 10:25 pm on Oct 29, 2008 (gmt 0)

Google's own text that appears right below my payment info: "Payments are converted to local currency at the prevailing rate at time of payment processing."

OK, I stand corrected.

Exchange rate applies at the time of the transaction. Using your logic, if I bought a pair of shoes from the States that were made in 1970, I should be paying whatever the rate was back then?

No, manufacturing is not a "transaction." The transaction takes place when you pay the money for them. If you paid money for them in 1970, then yes, you should have paid what the exchange rate was in 1970. :)