We keep reading about the sky rocketing value of the Euro. However, according to today's rates, the Euro has passed below $1.20 and now stands at something like $1.19769. Remembering that the original value of the Euro was pegged at $1.17 that represents only a 2.3%; increase over its value a couple of years ago.

Of course some of us remember when the Euro plumeted to $.85 but apparently that was the abberation.

Incidentally the pound has decended through the $1,80 level and is now sitting at $1.79127.

Hopefully these trends will continue.

I find it most amusing that people make so much fuss about exchange rates when dealing in amounts that I'd imagine are always below 10000USD. The slight daily fluctuations will not even make a 100USD difference. Of course it is always a bonus when the exchange rates are in your favour, but so what if they're not? Just enjoy your holiday.

Other than when you travel, that may not really be good news for you as the movement may have something to do with the strong expectation in the market that the Fed will begin a cycle of raising interest rates.

I agree with m_kingdom (did I say that?? and it's not the first time! agree on the seals as well).

But yes, over a 6 month planning phase, the changes can hurt or be great, depending on direction. So why not just plan your budget to the worst exchange average in the last 2 years or so? Then book your hotels, plan your meals and costs accordingly. Worst case then is that you end up with a nice surplus for a last minute purchase or as a starting fund for the next trip.

Always nice to hear better news about the rates though. Did the dollar actually rise, or did the Euro drop?

xyz123, I understood you were making a positive comment about the overall general trend and not daily movements.
Sure didn't take long for the negative comments to gush forth.

Good question! I think the dollar rose based on the good jobs report for March. Other reports that have come out lately may have boosted the dollar a bit, like the one on increased consumer spending in the US. The Euro guys keep implying they're going to cut the interest rate but they don't, and every time they open their mouths the euro falls a bit.

Here's a cool graph that shows the euro to dollar for the past 18 years.

http://finance.yahoo.com/m5?s=EUR&t=...mp;a=1&c=3

Verrrrrrrrry Interesting.

The Euro didn't come into being until 1999 and the currency wasn't issued until 2002.

I would imagine the graph (before the euro) is based on a compilation of the currencies. Generally when the dollar was weak against one European currency, it was weak against the other major ones as well.

The Euro was compiled based on the value of the European currencies as of a certain date (in 1997 or 1998 or something like that). At that time, each currency was assigned a fixed value against the Euro never to be changed. Doing all the math, came up with the number $1.17 = €1. This designation was in a way, artificial. Making a Euro worth so many French Francs or German Deutsch Marks or Italian Lira had to be based on somebody's decision of just how much they wanted a Euro to be worth; that decision did not (or should not) affect the rate between the individual currencies. They wanted a currency to compete against the dollar so they deliberately set out to make a Euro worth more than a dollar...they could have, for example, aimed to make a Euro worth US .50 or anything they wanted; that would have affected the rate of how many of each local currency would be a Euro. They set out to make the Euro about $1.17 or that is what I have read so one can do the math involved and come up with an approximation of just what a Euro would have been worth going back as far as you want.

The only point being made is that while travel to Europe is somewhat (actually a great deal) more expensive than 3 years ago, what it is today is more in line with what it was supposed to be. Of course many Europeans tell us that they were destroyed by the Euro insofar as local prices were all rounded up in the coversions causing a much greater degree of inflation and much more expensive cost of living.

The Euro replaced the ECU (European Count Unit) (and the original value of an Euro was the value of an ECU at the moment of the switch).

The ECU was based on a "basket" of european currencies (An Euro could be worth, say 0,54 french francs + 0,212 deutchmarks + 815 liras+....etc..).

It was used for various purpose, in particular for bonds or loans. The value of bond in ECU was less likely to fluctuate than the same bond issued in , say, pesetas.

So, though you can't strictly speaking study the fluctuations of the Euro over the last 18 years, you can certainly compare the value of the dollar to the value of the ECU, then the Euro over these 18 years. It's however not exactly the same thing, since not the same countries are included.

Yes, but it was $0.84 in early '01 and $0.97 in Sept '02.
I rather think that when the the new flood of mostly impoverished 75 Million "Easters" joins the EC on 1 May, the Euro will tank.
And, just wait until the 455 million EC folks really retire - 1/3rd will be totally dependent on Gov't checks for ALL of their income by 2025.

To those people like m_kingdom for whom money is a trivial matter, let me try to explain something. But first let me make it clear, I'm not complaining, merely explaining.

Every year I rent the same flat in London. It costs me 900 pounds per week, as it has for about nine years now. Last year, that came out to $189 a night (based on the exchange rate on the date when I paid it). This year it costs me $234 a night. If I multiply the 13 nights there by the $ 45 difference, that is a total of $585 more JUST for my rental for two weeks of a three month trip. Maybe that is nothing to some people, but $585 is not pocket change to me. So, yes, the exchange rate IS important. And don't forget, that $585 is only additional cost for housing, never mind the differences in theatre ticket pricing, meals, and all the other extras. It is a BIG difference in cost for two weeks in London.

On the other hand, while last year I paid $285 a night for a hotel for five nights in Rome (total of $ 1425), this year I'm renting an apartment for a total of $1120 for a full week. So for me, it has taken some real work to see how I can continue to take my long trips and keep my costs similar despite the exchange rates. There are ways to keep costs down, but if I traveled identically to how I did last year for three months, it would amount to a good $5000 to $6000 more in cost just due to the exchange rate. So my concern for that kind of money may amuse some people. But I find it hard to believe that they would be amused if the shoe were on the other foot.

When the new members join the EU next month, they aren't joining the euro at the same time (and there's no guarantee they will), so it really shouldn't affect the value of the euro. Besides, everyone knows they're joining and most of currency fluctuations are based on expectations, so as of May 1 nothing will really change.

By the way, the minor fluctuations in the euro-dollar exchange rate can be very important to Americans living in Europe, being paid in euros! We have bills to pay in the US in dollars and savings in euros.

Entschuldiegungsie Herr Peep,
You are being compensated in an overappreciated currency - the Euro - and paying your "bills" in the US with same. Additionally, your savings are in the "hot" euros. Sounds like you ride the currency wave - Oh yea, the Euro is down a fraction in the last few days, better get out!!!

Re Patrick:

If it has cost you nine hundred pounds each year for the past nine years, then in real terms it has become cheaper as inflation must be taken into account. Therefore, it is generally expected, as an economic theory and foundation, for costs to rise in the long-run!

What an idiot. So inflation should make every thing cost 20% more this year than last year? I don't think so. But the change in currency exchange rate for pounds/dollars has. I don't expect you to be able to understand that, m_kingdom.
The fact that the owner of the flat has not raised my rent each year (although the regular rental rates HAVE increased, but they like me) is totally beside the point for what I was discussing above. And with the exception of my rent in London, everything else HAS gone up in pounds -- theatre tickets (of which I buy many) in particular. So when you add the increased cost AND the extra 20% currency exchange it is a WHOLE lot more than one can justify as inflation.

Rents have risen well in excess of inflation, especially with the recent property boom in London. If I could buy property at prices that were around nine years ago, I (and many others I'm sure) would be laughing!

Of course prices rise, in your case theatre tickets (which are all under 100GBP per person) may well have risen both in real terms as well as exchange rate links! However, you ought to be able to see that the money you save on your rental, which should be several times the price nine years ago, will more than cover this increased cost.

Don't live life expecting things to get cheaper, they rarely do.

See, I said I knew you wouldn't understand. I'm not talking simply about price increases. Of course prices go up here, there, and everywhere. What we're talking about here is that not only do the prices go up, but as they have gone up, our dollar has gone down in the past year or so as well, to the tune of 20%. Too bad that is so hard for some people to understand. If inflation makes a 5% increase in a year, we're talking about things costing us 25% more in a year. Duh!! Difficult concept, huh?