Falling Dollar
 

Hi, <BR><BR>We are planning a trip to France and Italy in May, And the dollar keeps falling. Has anyone who has been in Europe noticed that this is really making there vacation cost more? I know it is defintaly affecting our hotel search. What kind of exchange rates have people been seeing. I have not been to Europe since everyone use Francs and Guilders and Marks. <BR><BR>

When dollar falls against the euro, anything priced in euro will cost more. What you see in the financial press as the dollar/euro rate of $1.1050 (like today) is more like $1.1350 when you come to pay with your card or euro cash. To make things worse, the inflation's been creeping up in Europe with higher oil and fear of war. If you are booking hotels independently, you'll feel the full effect of a weak dollar. It may be worth while booking through a travel agent or operator, who may have fixed dollar/euro rate agreed months ago. Dollar has also been weak against Swiss Francs, and pound sterling, but less so.

Today the Euro/$ = 1.10/1.00 <BR><BR>I have noticed a big change .. if you take out 100 euros that equals $111 ..<BR>not including the expensive international ATM fees .. I've had to cut my travel plans back because the exchange rate has been killing me over these 7 months.

The dollar has declined since February, 2002 by approximately 22% against the Euro so you can expect to pay about 25% more than a year ago for meals, entrance fees, etc. Lodging may have increased somewhat less because of the decline in tourism. Don't you wish you had gone last year?

Hi<BR> A little perspective on this; about 20 years ago the British pound was worth about $1.75. Today it is $1.60.<BR>Likewise, the Franc was worth $0.20. Today the Euro equvalent is about $0.16.<BR><BR>

Look on the bright side, in the big picture the falling dollar is the result of the low interest rates in the US and generally higher rates in Europe. If you haven't already done so, if you refinance your mortgage, the savings may make up for the exchange rate decline. If you work for an American company, you'll also be happier to know that our products will be more competitive in the European markets.

Hi. I'm not sure what you mean by does the falling dollar &quot;really&quot; make one's European vacation cost more? As Alec said, when the dollar falls against the euro, anything priced in euros will cost more dollars. <BR><BR>Here's a brief related article by travel writer Carol Pucci in this past weekend's Seattle Times:<BR><BR>&quot;If Europe's in your plans, you'll need to dig deeper&quot;<BR><BR>http://archives.seattletimes.nwsource.com<BR>/cgi-bin/texis.cgi/web/vortex/display?<BR>slug=new09&amp;date=20030309&amp;query =pucci <BR>

And it's really more about that the euro has grown stronger, not that the dollar has weakened that much (a little, but not enough to account for the changes in rates).<BR><BR>I haven't looked at the euro rates recently, but I've been getting a pound for about $1.61. And it was just 10 years ago when I was paying about $1.75 for a pound. Obviously I'd prefer to pay the $1.44 of about 18 months ago, but currencies fluxuate. It's a fact of life.

And Genesea, I question what you mean by the &quot;expensive&quot; international ATM fees. No European bank to my knowledge charges any fee whatsoever for using an American ATM card to withdraw money from them. The most I have ever paid my bank (Bank of America) for a European ATM withdrawal is $1.50, and on most withdrawals no fee at all. You can contact your bank and find which foreign banks you can use your card at to avoid any ATM fee at all. If your bank is charging you some &quot;expensive&quot; fee for withdrawing money from European banks, then you need a new bank. It's that simple.

[Message: And it's really more about that the euro has grown stronger, not that the dollar has weakened that much (a little, but not enough to account for the changes in rates).]<BR>What? It does not matter if your perspective is that the Euro is stronger,or that the Dollar is weaker your Holiday will still cost you more than it did say four months ago.

I think Ann41 was correctly stating that what we've seen over the past few months is a strengthening of the euro, not necessarily a weakening (or falling) of the dollar. Of course, for Americans traveling to Europe, the distiction is not that important.

I've been following the falling dollar/strenghing Euro since last summer when my family and I first decided to take an overseas vacation. <BR><BR>At this point, my main question is: How far will it go? Right now, the change in cost is bearable, but if the dollar goes down another 20-25%, we might not be able to afford to go. <BR><BR>Does anyone care to chance a guess as to future trends?<BR><BR>Jennie

Now, to be completely irrelevant, the British Pound in the 40s was about $5.00. You've cut the cost of going to the UK by 65% by waiting 60 years. <BR><BR>Patrick, you are right about the ATM fees. I've never paid one either but the credit and debit cards can have a fee for the currency conversion. I've just checked three of mine for this trip and the charges are 1%, 2% and 2%. Some, I understand, have been charging 3%. A call to the 800 number on the card might save a few $.

Some of us are right on the cusp of being able to afford travel, and it does make a difference, not just the quality of accommodations.<BR><BR>For example, 3 years ago, we spent a week in Spain and our hotel was roughly $120/night. The same hotel now costs about $160 night, which means on the same budget (and actually we have a tighter budget thanks to lose income), we could only afford 5 nights, which is just short enough to make us think twice about spending $950 on a plane ticket and putting up with jetlag trashing one of the days we're there.<BR><BR>Canada's looking better, by contrast.

Jennie, Re: &quot;Does anyone care to chance a guess as to future trends?&quot;<BR><BR>No guesses as to future trends but your question reminded me of a Saturday Night Live skit from a number of years ago. A takeoff on roundtable discussions by financial/investment experts, one of the panelists was a silver-coated guy named Futureman. <BR><BR>&quot;Futureman,&quot; said the moderator, &quot;You've had nothing but success with your investments. What's your secret?&quot;<BR><BR>&quot;Simple,&quot; replied Futureman, &quot;It's a three-step approach: (1) go back in time, (2) buy low, (3) sell high.&quot; <BR><BR>:) <BR>

Well, <BR><BR>I am pretty ticked about the weak Dollar, mainly because we planned our 2 week vacation in May and we cannot reschedule(at least anytime in the near future) because of other plans in our future. The worst thing is - that I went to Europe 3 years ago and everything was dirt cheap - from hotels to meals! - I guess they will get my money this time

I understand your being ticked, but that's the way the baguette bounces. <BR><BR>Sometimes you get a break, and sometimes the other guy gets a break and, for those whose home currency is the euro, the U.S. is now more affordable.

I'm finding it difficult to be sympathetic about the US falling dollar. We Canadians have been paying close to $1.60 for a US dollar for years, and our prices are about the same as yours. It makes travel to the US very expensive for us, but to me it's worth it. The irony is that back in the 70's our Canadian dollar was worth more than yours, which made travel in the US quite a bargain. Re: European travel and Euros--we spend a lot of money doing the same old thing in the same old place at home--any money spent on travel is money well spent.

The dollar declining, the euro strengenthing...&quot; the pot and the kettle'??<BR><BR>All I know is my IRA and 401K and stocks are in the toilet!And I am out of work...by choice and if someone screws with my medicare I am going to Branston instead of Paris!

And it IS that the dollar is weakening, against lots of currencies, not just against the Euro.

Actually I think it is a bit of both: ie, dollar weakening &amp; the euro strengthening - although more of the former than the latter. For eg, my home currency, the humble Aussie dollar, has appreciated around 17% against the US dollar in the year to February but depreciated 5% against the euro.

For those who wonder where it's going, I watched an economic show on European TV with European and American economists expecting the difference to increase--probably to the euro being equal to about $1.15 (the best, commercial rate), which means for the average consumer, who doesn't get the &quot;best&quot; rate could be more like a euro costing $1.20

I can't believe people are quibbling over 13 cents on the dollar! That's really not a lot of money. I'm going to London in 2 weeks and I wish the USD to GBP exchange rate was that great.

We have the same concerns for our trip to Italy this summer. We booked apartments for a specified Euro amount and the apartments suddenly began costing us a bit more than we booked for (in the US Dollar amount, of course).<BR><BR>So, since we have to pay in Euro cash when we arrive, we simply began buying Euros a few weeks ago. Now we feel better that at least our accomodation prices are locked in at close to what we booked them for (an exchange rate of 1.06 at the time).<BR><BR>Things could turn around completely, get even better than 1.06, and I could kick myself for buying at 1.07, but I figure it's better to be safe than sorry at this point.<BR>

statia,<BR><BR>Where did you buy Euros at? Everywhere I look thaey jack the prices up on exchange rates (+5%-10%)

Hi<BR> Re predicting the future:<BR>One year an economist friend showed me the data for the past ten years on the US dollar vs various European countries. The dollar went up in the winter and down in the summer, when the tourists went to Europe.<BR> So, that winter I bought European currencies for my summer trip.<BR> Result? The dollar kept rising that year and I lost about 8%.

Dgruzew,<BR><BR>I live very near St. Barth's and have been buying them from friends who go back and forth. So, I suppose I'm in a bit of a different circumstance (thank goodness).<BR><BR>I agree with you, though. The bank here (even though I'm in a non-Euro Dutch territory) is trying to rip us off on Euros, as well.<BR>

Patrick,<BR><BR>Maybe you can help: for my friends and I who have been studying over here in France, we are being charged by our US banks for ATM usage .. I use Washington Mutual, and I've found between $18 and $39 fees for my ATM usage ... no one that I know of (who've called their banks and told them that it is illegal to be charging when the european ATMS don't forwarn a usage fee) have been able to stop their bank from charging them. Any ideas?

The rules of Cirrus and Plus prohibit the imposition of fees by banks for using their machines. That is why the European banks do not add fees to withdrawals by US cardholders.<BR><BR>However, these rules do not prohibit your bank from charging whatever it wants for withdrawals at another bank's machine. These fees range from $0 to as much as $5 per transaction. This is a decision solely up to your bank.<BR><BR>You have to check with your bank to see what they are charging. Some banks charge more for withdrawals from international ATM's than they do for domestic withdrawals; others charge the same amount.<BR><BR>As cirrus and plus are part of the mc and visa systems respectively, the rate used in the interbank rate plus a 1% charge to cover currency fluctuations. I suppose this is reasonable. Some banks, already surcharging additional amounts for use of a credit card on international transactions, are now adding an additional 2% to the exchange rate. These banks at present are a distinct minority but again it is something one should be aware of.

Well if we ever wondered what drives the Euro, yesterday was a great example. The dollar against the Euro went from 90 something to 92 something as the stock market had a great day. Will it be short lived?

In the New York Times today...

&quot;Euro Climbs to a 4-Year High Against Dollar&quot;

http://www.nytimes.com/reuters/busin...ets-forex.html

&quot;The euro hit a four-year high of $1.1506 on Thursday&quot;

&quot;The euro, born on Jan. 1, 1999, first traded against the dollar at a value of $1.1747&quot;

&quot;The dollar suffers not only from low U.S. interest rates, but also from a $500 billion trade gap that sends more cash abroad. A sluggish economy and sputtering financial markets are not attracting enough capital to raise demand for dollars.&quot;

Over the last 12mths these are the strongest major currencies agst the USD:

EUR + 27%
CHF + 22%
AUD + 19%
CAD + 12%
JPY + 10%
MXN - 7%
BRL - 16%

Everything in financial markets is relative. Whether a currency is declining or rising agst another is relative. We live in a US centric world so everything is relative to the USD. Looking at the above one cld say the USD is declining agst most currencies, with the exception of Mexico and Brazil.Or you cld say the others are rising. It's the same thing as currencies are a zero sum game.

I work as an adviser in financial markets and these are the market's thoughts. The dollar is declining becos of the twin deficits (current and capital accts).

The US imports more than it exports hence the current ac deficit. More investment is leaving the US becos of low interest rates hence the capital acct.

The fall of the dollar is not insignificant. You wld hv gotten a holiday in Europe for 27% less last year. You hv to pay 27% more for a BMW in the US this yr.

The only way for the USD to rise again is to either import less (which is happening naturally due to dollar weakness)or to get US interst rates up to attract capital. Greenspan has said the latter is unlikely so the USD will remain weak for awhile.

Conversely if the ECB cuts rates (which they didnt last nite) it wld narrow the i/r gap and make US rates appear more attractive, relatively.

Hvg said that, the EUR is just back to where it was when it was born. So if you had been in a himalayan retreat for the last 4 years you'd hv said the damn dollar hasnt moved at all!

Re: the comment in the NY Times article, &quot;The dollar suffers not only from low U.S. interest rates, but also from a $500 billion trade gap that sends more cash abroad&quot; and linwein's comments &quot;The dollar is declining becos of the twin deficits (current and capital accts). The US imports more than it exports hence the current ac deficit. More investment is leaving the US becos of low interest rates hence the capital acct.&quot;

Those Americans going to Europe may pay more for their vacations because of the falling dollar, vis-a-vis the euro, but many of them have also likely saved money due to the lower interest rates that have been part of the reason for the dollar's decline.

Also lower dollar helps exporters and means job security for those who work for them. Also higher import prices mean people are more likely to buy US-made goods, stimulating consumer demand. And while it's bad news for US visitors to Eurozone, more Europeans are likely to visit US attracted by lower prices.

May 19, 2003: &quot;U.S. Aide's Comments Drive Down Dollar in Currency Markets&quot;

http://www.nytimes.com/2003/05/19/bu...9CND-DOLL.html

&quot;As the dollar fell, the euro rose as high as $1.1737, the first time in more than four years that the euro has been worth more than $1.17, the level at which it began trading when the euro was introduced as the common European currency in January 1999.&quot;

&quot;traders interpreted Mr. Snow's remarks as confirmation of their suspicions that the United States favored a weaker dollar&quot;

&quot;Allowing the dollar to weaken could also help the Bush administration politically.&quot;

&quot;the reappearance of large and growing budget deficits has hurt the United States' reputation for fiscal stability, he [Tony Rademeyer, HSBC's head of corporate banking and markets for the Asia and Pacific region] said.&quot;

It gets even worse capo!

From Bloomberg.com....&quot;Robert McHenry, who oversees $2.5 billion of international investments at Hartford Investment Management Co. in Hartford, Connecticut, expects the dollar to fall to $1.40 per euro in the next six months.&quot;

I think despite the falling dollar there will still be tourism. Look at Great Britain and the pound against the dollar. The pound has always been stronger against the dollar and still it is one of the top destinations for Americans.
I have taken advantage of the economic situation in Brazil and Argentina. Brazil has always been a good value but now it is excellent. Argentina was always expensive to visit now is affordable due to their economic problems.

May 25, 2003 &quot;For the Euro, the Worst Time for the Best of Times&quot;

http://www.nytimes.com/2003/05/25/we...ew/25LAND.html

&quot;A falling dollar translates directly into a rising euro, which makes German-built cars and French wine more expensive in the United States. Just as a weak dollar could help revive the American economy, a surging euro could hobble the exports Europe needs for growth.&quot;

Hi all,
With respect to low interest rates: I have just refinanced my mortgage. The savings will more than make up for the increased cost of travel to Italy this fall.

May 27, 2003: &quot;Euro Reaches New Peak Against Dollar&quot;

http://www.nytimes.com/2003/05/27/bu...7CND-EURO.html

&quot;The newly invigorated euro reached its highest level ever against the dollar today, exceeding $1.19 in Tokyo trading.&quot;

&quot;Officials at the European bank said the euro was merely reclaiming its proper value. But the rapid rise has unnerved corporate executives here, who fear it could strangle Europe's economy by pricing their exports out of the American market.&quot;

&quot;Critics were already complaining that the bank, with its single-minded focus on curbing inflation, has paid little heed to the continent's more pressing problems, which include two years of near-stagnation, soaring unemployment and, in Germany at least, the specter of deflation.&quot;