Dollar "sags" to new low....
 

I'm really getting disgusted by seeing and/or hearing this headline every morning. It seems as if it doesn't make any sense to make advance travel arrangements to Europe/UK anymore. What you thought was a good deal two months ago could end up being an overpriced vacation the week you are about to go. I leave for London in 10 days and with the dollar "sagging" to 1.87 against the pound, I'm considering cancelling my trip. Should I? I'd like to be optimistic and think that things will get better, but it is quite possible that the dollar will fall even lower. Any suggestions?

Don't cancel your trip. That would be silly. Instead, stay in places that aren't quite as expensive, don't eat as many extravagant meals and enjoy things that are free, like scenery. The money that you lose on the cancellation just isn't worth it.

How long ago did you make you reservations? It hasn't changed so much in the last 6 months that it would be worth canceling.

Bill

I booked this trip about 6 1/2 months ago....shortly after a return from London/Paris last March. The exchange rates at that time were relatively workable, and on the flight home I was cringing at some Canadians that were talking about the horrible exchange rate the Canadian dollar brought them. And now, it's almost the same situation for the U.S. dollar. But, I'll take your advice and keep my plans. I'm not big on dining out or shopping, so the things I am planning to do won't break the bank I guess.

It's just one of those things. With your airfare already purchased, etc., it doesn't seem like cancelling would be very prudent. I have a couple trips to the U.K. and France planned later this year for which I was able to prepay accommodations. I also keep a certain amount of European currency "in stock". Both of those moves have been looking brilliant up to this point, but the risk cuts both ways at any particular point in time. Losing some $$$ on the exchange rate isn't pleasant, but if you buy non-refundable tickets like I do then cancellations aren't free either. Given the choice, I'll take the experience -- even if it is a bit more pricey than I'd like.

But isn't the stock market doing nicely? I don't know about you, but I was delighted with my monthly statements today -- I think the growth there in just the past month more than makes up for the "loss" I'll suffer from the dollar drop to the euro.

Patrick, I was thinking the exact same thing. Every situation is different, but my stock market gains over the past six months have easily outpaced any decline in the dollar.

On a positive note, I just recently made reservations in a hotel that has a "dollars = pounds" offer. I used this same hotel the last time I visited and it was quite nice, clean, comfortable and affordable for London. I was planning on staying elsewhere this time around, but recently phoned this hotel and they have plenty of room for the days I will be in town. Things are looking up!

I'll repeat this quote from an article on Bloomberg today:

"The euros average value during 1991 and 1992 was $1.36, based on the prevailing exchange rates for its constituent currencies at that time. ITS CURRENT RATE AGAINST THE DOLLAR IS ABOUT EQUAL TO ITS 10-YEAR AVERAGE OF $1.26 DURING THE 1990s. It peaked just shy of $1.70 in September 1992."

The Wall Street Journal of Jan 2 had 51 economists projecting an average value of $1.23 for June with a spread from $1.15 to $1.34. I've eliminated the projection of $0.98 by one economist because it appears to be a typo, the yen and euro reversed.

I couldn't find comparable statistics and projections for the pound but it's likely it will go in the same direction as the euro albeit not exactly.

lauravsol, good work and congratulations on securing a good deal. That's half the fun anyway, isn't it? :) This is also a great time for people to dip into their hotel points balances and capture some serious value vs. paying higher costs, when that's an alternative.

I have a suggestion. Consider yourself fortunate, fortunate to be able to travel to Europe in the first place.

I've said this before and I'll say it again. Before the euro, the exchange rate went up and down all over the place. People didn't think about it. They just asked how many francs or marks to the dollar and did the math. And with lira being thousands to the dollar, it was too mind-boggling for the average person to keep tally of how that exchange rate was varying from year to year. But as soon as people got into their heads that somehow a euro was supposed to be roughly equal to a dollar, everyone went wild. If the comparison wasn't so simple, most people wouldn't even realize the difference when traveling. They rarely did before the euro!!

>Before the euro, the exchange rate went up and down all over the place. People didn't think about it.

This discusion began with someone concerned about the value of the dollar against the pound.

Keith

What is so annoyinig is that you cant be sure of how much money your trip will cost when the dollar is constanly losing value. I mean is it going to drop 20%, 30% or more by the time you actually take your trip? The only thing more frustrating than seeing the dollar drop each dat is to read replies by other unsympathetic and hyper critical Fodorites saying " Be lucky you can go to Europe or stop whining". You know who you are!

We went to London the second week in December, but fortunately I had booked air and hotel in March, with a ridiculously low air fare. Granted our dollars didn't go as far for dinners (our full English breakfast was included), but so many museums are free, as are church evensong/concerts, etc. I'm sure you'll be able to sightsee and enjoy yourself in spite of the money factor. Please go and have a wonderful time. I think you would forever regret cancelling.

Maletas:

You can do a lot to lessen the impact. You can pay for your room in advance and secure it at the current exchange rate, though you risk the possibility of the dollar getting stronger. At that point, you will have your flight and your room paid for which represents the bulk of any travelers budget. Thus a 20-30% change would only be taken out of your meal and other incidental budget which could feasibly be compensated for by more carefully selecting where you eat. It certainly won't raise the price of your entire trip by 20-30%.

There are other things you could purchase in advance to protect yourself against the dollar deflation like travel cards, but the deals are frequently better in the UK, so you would probably still be better off there. Consider the GB Heritage Pass though. It is a good value.

What ever you do, have a great time!!!

Bill

Did I miss the memo that said that there were guarantees in life, especially money matters??!?!

I know this sounds like a dumb question, but to the person who said the the price of the euro in 1991, I thought that the euro only started being around 2000.

Illusion:

The note included the explanation "based on the prevailing exchange rates for its constituent currencies at that time."

Bill

as maletas stated, it's more the uncertainty of how much i'm going to need to take with me - or save up - in order to take the trip. one has to agree that if every single day it is news that the dollar is continuing to sink, and you are about ready to embark on a trip to one of the countries that the dollar has sunk very low, can be very frustrating. my only question was whether or not i should cancel and go later when possibly i'd get better rates or just suck it up and take advantage of the opportunity i have to go now (i.e. already approved time off from work, money already saved for the trip, etc.) while i'm no economy buff, i do understand that there are ups and downs regarding the value of money compared amongst different countries. i was just unsure of whether to still go when it was down or wait until it started to look up.

but as one reply said, i should just be fortunate i am able to go - and that i am. i think i've eliminated a big open-ended question by booking the hotel with the dollars = pounds offer. this way, i am assured at exactly how much i will need for my hotel and will have to just play it by ear once i arrive regarding the other things.

ahhh, the beauty of being a solo traveler is that i don't have to take anyone else's preferences into consideration. it's all up to me!

lauravsol, Ummm, the Canadian situation is not quite the same as the American. The exchange rate for the CND$ is $2.31, much worse than the US$ at $1.80. So I would try not to worry about your rate too much. Just enjoy. I'm going to London this month and have to contend with my horrible rate... but I just cut corners other ways.
And if I can be allowed to gloat just a tiny bit with out the firing squads showing up, my trip to Florida will be MUCH better for me with the $US being so much lower than last year. My CND$ will go so much further this year.