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Current Euro/Dollar Conversion -- relatively strong?

Current Euro/Dollar Conversion -- relatively strong?

Mar 2nd, 2006, 05:18 PM
  #1  
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Current Euro/Dollar Conversion -- relatively strong?

If the current conversion rate is 1 euro - 1.19 USD, is this a relatively good rate given how weak the dollar has been in the last year? Would you choose to pre-pay for a week of hotel in USD today or pay in Euro this summer?
fishee is offline  
Mar 2nd, 2006, 05:27 PM
  #2  
P_M
 
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What if you pay now and the dollar gets stronger? Then you've lost. So to answer your question, no, I would not prepay because we don't know which way the dollar will go. Furthermore, nobody can predict future exchange rates with any amount of accuracy. It's anybody's guess.
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Mar 2nd, 2006, 05:28 PM
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It is a relatively good rate, but no one can predict currency fluctuations, and I'm by no means a currency trader, so I couldn't say whether the rate will improve or not by the summer.
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Mar 2nd, 2006, 05:38 PM
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sure, I wasn't asking for a prediction for the future but I'm trying to guage this in relation to the past year... I only first went to Europe this winter so I don't have any point of reference whatsoever. thanks.
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Mar 2nd, 2006, 05:42 PM
  #5  
P_M
 
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I understand that you are not asking for a prediction, but you really can't base your decision on the past rates, because the past is not necessarily and indication of what the future holds. Whether you win or lose by prepaying depends entirely on the future, and of course, that's unknown to all of us.

Another thing to consider when crunching the numbers is the time value of money. I don't know how much you are looking to spend on this hotel, but if you prepay, you stand to lose not just on a stronger dollar, but also you will lose interest you could be earning between now and then. Also, what if something comes up where you must cancel your trip? How easy will it be to get your money back? Just some more food for thought.
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Mar 2nd, 2006, 05:43 PM
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No the dollar is almost where it should be. When the Euro first came out it was pegged at 1.16$/E. 1 1/2-2 yrs ago it was 1.32.
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Mar 2nd, 2006, 05:46 PM
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J62
 
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I predict with near 100% certainty that the dollar/euro exchange will change between now and the summer.
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Mar 2nd, 2006, 05:46 PM
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It's a crap shoot . . 4 years ago it was €.85 to $1
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Mar 2nd, 2006, 05:46 PM
  #9  
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Jay, you have got that completely backwards. When the euro was new, it was worth about 16% LESS than the dollar. Today it's worth about 20% more, so your numbers are way off. And who is to say where the dollar "should be?" Exchange rates will change over time, and there is no standard for what should be.
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Mar 2nd, 2006, 05:47 PM
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Damn my fingers . . 4 years ago it was $.85 to €1
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Mar 2nd, 2006, 06:11 PM
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MaureenB
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What if you research the EU/Dollar rate data from recent past years? Could you crunch the numbers to discover the probability that the EU will be more expensive come summer tourist season? I could definitely be wrong, but in the past two summers when I was watching the rates for our trips to Europe, the EU was between $1.22 and $1.32. Makes $1.19 look pretty good.
 
Mar 2nd, 2006, 06:28 PM
  #12  
P_M
 
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1.19 might look good compared to the past couple of years, but it doesn't look good compared with when the euro was new and the exchange was around $.85/1E. It's entirely possible that later this summer the euro will cost far less than $1.19, and we will look back at 1.19 as being a bad exchange. But we won't know until it happens.
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Mar 2nd, 2006, 06:54 PM
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The euro was originally to trade at about $1.16 to 1€...soon after its introduction it dropped through the floor to as low as $.85....then as the US dollar weakened after 11/09, the euro shot up to $1.32....for the last while it has hovered right around $1.19 to $1.20 sometimes just above, sometimes just below.

Do remember though if you exchange money in the US you will be exchanging cash and will be lucky when all is said and done to get out at less tha $1.28 or so.

And as others have suggested, nobody really knows.

In terms of historic currency rates, at least modern history, the US dollar is neither weak nor strong right now but pretty much where it was pegged to be at least against the pound, euro and Swiss franc. There have been times the US dollar has been better and times where it has been worse.

Nobody knows what the next economic reports will be....so nobody knows. Don't worry about it....if you pay at today's rate you will get fair value for the exchange most likely.
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Mar 2nd, 2006, 06:55 PM
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heck...when I was in Italy in December 2004 the Euro was up between $1.30 and $1.35 at one point. Totally put a damper on my shopping...sort of.
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Mar 2nd, 2006, 06:58 PM
  #15  
P_M
 
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xyz, I remember when the euro first existed on paper but was not yet in currency form and I believe you are correct about the euro value at that time. When Jay spoke of the euro being new, I thought he was talking about when the paper currency came out in 2002. As most of us recall, the euro was worth less than the dollar on those days. If Jay is speaking of the pre-currency euro, then my apologies to Jay, as we were not on the same page. However I stand by my statement that there's no standard for where the dollar/Euro exchange "should be."
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Mar 2nd, 2006, 07:02 PM
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Wikipedia is good.

After the introduction of the euro, its exchange rate against other currencies, especially the US dollar, declined heavily. At its introduction in 1999, the euro was traded at USD1.18; on 26 October 2000, it fell to an all time low of $0.8228 per euro.
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Mar 2nd, 2006, 07:02 PM
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Hi fishee, I was going to comment, but as usual P_M beat me to it (we tend to think along the same lines its seems).

I never pay for a hotel in advance. I make sure I have enough money in my money market account (which earns interest) to pay my CC bill when it arrives..or my daughter pay it for me through my account if I am not back by than). So I make a bit of interest. And if some emergency happened (never has but who knows) I don't have to worry about trying to get my money back from a hotel). Airline tickets of course is another matter..you must pay for them in advance. So bottom line, put the hotel bill on your credit card when in Europe and pay it when the statement arrives. At least that is what I do. And have fun!!!
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Mar 2nd, 2006, 07:10 PM
  #18  
P_M
 
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Hi, LoveItaly, not only do we think alike, but just now we were posting at the same time.
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Mar 2nd, 2006, 07:26 PM
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The wholesale rate is 1.19. I just talked to my bank and they said to expect the actual rate to be $1.24 for the average person.
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Mar 2nd, 2006, 10:12 PM
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Tamara: As w/ must US bank customer service agents, they don't know what they're talking about. That's a 5 cent ( or about 4% ) mark up per €. You won't have to pay that much w/ most any ATM/card combination.

@ $1.19 official, I can get € w/ my bank and CU ATMs for a fraction over $1.20.
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