Dollar/Euro

[paulbrussel]

Apparently no one is thinking about Europeans going to the USA :-)

I avoided the USA for several years because of the exchange rates; now it will be more avordable to go.

[NewYorkTexan]

I am scheduled to go to Europe monthly for the next few months and the exchange rate is starting to have a chilling effect on T&E expenses.

The first causality was wine, downgrading our selection during business dinners. If this was leisure travel, I would also factor in the exchange rate when looking at hotels.

[menton1]

Apparently no one is thinking about Europeans going to the USA :-)

I avoided the USA for several years because of the exchange rates; now it will be more avordable to go.

Well, of course, what's bad for the goose is good for the gander...

But these rates now are really over the top-- there has to be a balancing point. And, as a European you realize this will have a deepening effect on your economy because Americans will slow down their purchases of European goods. It is already noticeable on imported foods-- my $2.99 Mamie Nova Yogurt from last year is now $4.49. I do not buy it anymore! The wire services have reported a great nervousness at Airbus for their future sales.

It is now time, at $1.25/€ for the EC to step in and exert some leverage to stop the disparity...

[Cusina]

Thanks, everyone, for the good exchange and credit card tips. We will be travelling to London early April. I think, for us, the compensation point for the weak dollar is that our airfare was VERY cheap through BA. It was actually cheaper to fly to London than to Orange County. The hotel we have booked (Millennium Baileys in S. Kensington) is roughly the same cost as a hotel in Chicago would be, so that doesn't seem outrageous (that 17.5% tax does bite though). I do anticipate food and shopping will be more expensive than I would like.

We rarely travel to Europe (young kids tend to tie one down) so I think we will stick our heads in the sand and just enjoy it. I don't anticipate purchasing less, just maybe complaining a little more.

[robyn]

Apparently no one is thinking about Europeans going to the USA :-)

I avoided the USA for several years because of the exchange rates; now it will be more avordable to go.

Well, of course, what's bad for the goose is good for the gander...

But these rates now are really over the top-- there has to be a balancing point. And, as a European you realize this will have a deepening effect on your economy because Americans will slow down their purchases of European goods. It is already noticeable on imported foods-- my $2.99 Mamie Nova Yogurt from last year is now $4.49. I do not buy it anymore! The wire services have reported a great nervousness at Airbus for their future sales.

It is now time, at $1.25/€ for the EC to step in and exert some leverage to stop the disparity...

European countries are far from our largest trading partners. The 4 largest are Canada, Mexico, China and Japan. The average dollar loss against the currencies in these countries over the last 52 weeks is about 5% (China is pegged to the dollar, and the Mexican peso was down). The European countries among our top 10 trading partners (Germany - 5th, UK - 6th, and France - 9th) make up about 16% of our total trade with our top 10 trading partners. So the rise in the Euro is unlikely to affect the average American substantially. There is a lot of data on http://www.census.gov if you're interested.

As for Airbus - it has recently announced that it is investigating moving some manufacturing facilities to the US to take advantage of the lower dollar.

With regard to central banks - they are powerless to stop secular currency trends (although their surprise interventions can keep traders on their toes and make moves proceed in a somewhat orderly fashion).

The forex markets are the largest markets in the world - and it is ultimately the economics of a particular country that will determine the secular trend in its currency (assuming the currency isn't pegged). With regard to the US dollar - the largest factor driving its move down now is low short term interest rates. These rates are not dictated by the administration. They are dictated by the Fed - which has been trying to "jump start" the economy and keep it going. I like international travel as well as anyone - but I think the health of our overall economy is more important. Note that my statement is not an indication that I agree or disagree that the Fed's way is the best way to accomplish this goal. Robyn

[menton1]

Although it never makes the nightly news, apparently Washington has a lot of choices available to them to strengthen the dollar. But they LIKE the weak dollar. Not to inject politics, but this is just another example of the economic policies of our current administration.

Here's an article from a well-respected economist: Cheapening the Dollar

[pedro]

Apparently no one is thinking about Europeans going to the USA :-)

I avoided the USA for several years because of the exchange rates; now it will be more avordable to go.

Here we go, Paul! It was about time that we had a positive exchange rate.

Sorry about you, guys, but now it's our turn. Well, at least for some months.

[chengb02]

lucky, lucky...I was looking into planning a last minute trip for mid-March, but decided against it when discovering the exchange rate was so bad. I was in the UK shortly after Christmas and that was bad enough. Well, airfare is a bit more expensive, but there is always Asia. For the time being, Canada isn't that bad either, I've picked Montreal for my trip...

[picaman]

From the U.S. perspective, things have been improving in this regard over the past few days. I'm going to Paris at the end of the month, and I'm watching the rate like a hawk. I've decided I have a "strike price" of $1.20. When I see it, I'm off to American Express for my euro-checks.

Jamie

[robyn]

Although it never makes the nightly news, apparently Washington has a lot of choices available to them to strengthen the dollar.  But they LIKE the weak dollar.  Not to inject politics, but this is just another example of the economic policies of our current administration. 

Here's an article from a well-respected economist:  Cheapening the Dollar

OK - I said it before - I'll say it again. The biggest factor driving down the dollar until the last couple of weeks is low short term interest rates. If Greenspan raised rates to 3% - you'd see an unbelievable dollar rally. I suppose he is technically part of the administration - but he has been appointed and reappointed by both Republican and Democratic Presidents. The only candidate who said he'd fire Greenspan was Dennis Kucinich.

By the way - I don't mean to imply that I agree with what Greenspan has done - but if a Democrat were President today - I think he'd be doing exactly what he's doing now. Robyn

[menton1]

OK - I said it before - I'll say it again.  The biggest factor driving down the dollar until the last couple of weeks is low short term interest rates.  If Greenspan raised rates to 3% - you'd see an unbelievable dollar rally.  I suppose he is technically part of the administration - but he has been appointed and reappointed by both Republican and Democratic Presidents.  The only candidate who said he'd fire Greenspan was Dennis Kucinich.

By the way - I don't mean to imply that I agree with what Greenspan has done - but if a Democrat were President today - I think he'd be doing exactly what he's doing now.  Robyn

Not according to the economist who wrote this article. He says that it's Treasury Sec'y Snow and the general policy of the Bush people to favor a weak dollar. They really made a joke of the conference in Boca Raton FL showing the general disdain and arrogance toward the rest of the world that they have continually displayed in this and other matters for the past 3 years.

Here we go, Paul! It was about time that we had a positive exchange rate.

Sorry about you, guys, but now it's our turn. Well, at least for some months

Realize that while this weak dollar may be a boon for Europeans traveling to the US, the article also indicates that the Europeans themselves would like a stronger dollar as a weak one will eventually start to affect the European economy in a strongly negative way.

[Bux]

We are several posts over the borderline separating food from economics and policitics as their own topic. Let's limit all posts to how the exchange rate affects your plans. Discussion of economic policy and politics is off topic and off limlts.

Management reserves the right to remove all posts, past and future that are off topic.

[John Whiting]

Discussion of economic policy and politics is off topic and off limlts.

Management reserves the right to remove all posts, past and future that are off topic.

Aw, just when it was getting interesting. . .

[wnissen]

Just a note for those of you who follow this sort of thing, the December Euro futures (i.e., an agreement to buy Euros at a fixed price this coming December) are roughly constant. That means that the markets feel the chance of a decline is about equal to the chance of an increase. So hopefully we won't see 1.40 or 1.00 anytime soon.

Walt

[robert brown]

What's wrong with seeking 1,00 anytime soon, unless you live your life in euros?

[windydaze]

My husband and I are going to Paris at the end of this month (May 22) and I can honestly say that I really hadn't given much thought to the exchange rate. Our biggest factor in flying to Europe is how cheap the flight is (we live in Austin, TX). We got an outstanding fare to Paris (cheaper than flying to New York, our backup travel plan) and just decided to go.

I gave a cursory glance to the exchange rates when I booked our hotel in March but the rates listed then really don't affect the price of our hotel since we don't pay till after our stay.

I love to travel and I try to save and plan for at least two trips overseas a year, regardless of the exchange rate. The exchange rate may stop me from buying a lot of things I really don't need (clothes, perfume, etc.) but it will never stop me from eating whatever I want when I travel. Food is the one thing I never like to skimp on when I travel overseas.

Edited May 6, 2004 by windydaze (log)

[robert brown]

Windy, welcome aboard. Have a great time and keep us posted.

[Margaret Pilgrim]

The exchange rate may stop me from buying a lot of things I really don't need (clothes, perfume, etc.) but it will never stop me from eating whatever I want when I travel. Food is the one thing I never like to skimp on when I travel overseas.

Windy, you are obviously a traveller and not a tourist. Enjoy every minute of your upcoming visit.

[windydaze]

Thanks so much for the kind welcome.

I've copied down a lot of everyone's suggestions from this forum about where to eat in Paris and I'm looking forward to trying as many of them as I can, although paring down the list is going to be hard! I'll do my best to return the favor and report on my dining experiences there.

[raisab]

Well the good news (if you can consider this good news) is that with interest rates about to rise, the dollar will grow stronger. It has already risen quite a bit in the past few days.

[John Talbott]

It's all relative and you have to average it out like income averaging on taxes.

In 1985, recall, it was 10 francs/dollar, the pound at par, and the lira over 2000; what a difference a few years makes; we stayed at the Villa D'Este and Pere Bise, arriving at both unannounced, the ailing Francois II Bise(http://www.perebise.com/uk/sommaire.htm) sent over some wine to go with our cheese, and we ate like kings.

[Bux]

It's all relative and you have to average it out like income averaging on taxes.

In 1985, recall, it was 10 francs/dollar,

I believe that was the summer we traveled in the Perigord stuffing ourselves with foie gras in starred restaurants for less than it would cost to eat mediocre meals in the states. As I recall, our budget was not very flush either at the time. This past year has been payback. I think we've contributed more than principle saved in '85 and the interest earned since then. I will say, and perhaps it's not that PC to say it here in the France forum, we're finding our euros go further in Spain than in France.

[menton1]

we're finding our euros go further in Spain than in France.

They always did! In the 80s, the differences were quite dramatic-- today, the gap is much narrower between the 2 countries. It started to close when they held the Barcelona Olympics...