How low will the dollar go before you would cancel or rethink a trip to Europe?
 

The devaluation of the dollar is getting ridiculous. I read on Bloomberg.com that the euro might reach 1.27 in the summer and maybe 1.35 buy the end of the year. Yikes!!! I am going to Barcelona in the summer for two weeks . I could have bought AAA travellers checks at 1.20 a few weeks ago. That seemed like such a rip off at the time so I didn't purchase any. I also decided not to buy them fearing I would lose out again with the commisions charged at banks for cashing the checks.
Has anyone decided not to travel because of the weak dollar? I might have cancelled the trip but I have my ticket and lodging paid for already. What are other peoples' thoughts?

I think it was worse when they went to the Euro. A room at my favorite Italian hotel was 33% more after they switched to the Euro. Now, with the devaluation of the $, I think I am paying apx. 50% more to travel. I hope it levels out soon! At least Barcelona is one of the best values around! Enjoy your trip!

Things have been worse than they are right now, in terms of exchange rates for U.S. currency. Looking at France, for example, the current rate is still better than it was seven years ago in terms of value, when you compare it against the underlying French Franc. Things are more expensive than they were in 2000, 2001 and early 2002, for sure. But some of the very favorable exchange rates for U.S. dollars that we saw in the relatively recent past weren't exactly "normal" either.

Values fluctuate and it is unwise to try to "time" currency exchange just as it is unwise to try to "time" the stock market. If you are going, just handle the money the way you normally would. If the exchange rate has that huge impact on someone's budgeted vacation, they should rethink going to that country, at least for now.

Canada is still a huge bargain, and I had the benefit of that last fall. When I went to France in 2000 (before the Euro), I also had the benefit of a great exchange rate and relatively lower costs. Britain in 1997 was financially tough - the pound was very strong against the dollar. So, you win some, you lose some.

If you wait for the perfect financial condition, you'll never go. Bite the bullet and go. We just returned from ten days in the UK where things are not cheap. However we had a great time.
Two years ago we spent 6 weeks in Australia and New Zealand and really took advantage of the exchange rate. You win some and you lose some. It all averages out, don't you think?
John

Flyboy and others are right. The exchange rate between the dollar and the franc/Deutschmark/guilder/kroner, etc. has been worse - and it didn't stop us going to Europe when it was worse. There were also the years in the early 80s when there were close to 10 francs to the dollar - YAY! - so we benefited from some years and took a dive in others.

I'm stuck with a French mortgage that is pegged to the prime in France, so am paying more than I have ever payed before, but heck, I got a bargain to begin with, with an exchange rate for 10 years of almost 7 francs to the dollar. You just have to go with the flow.

For a one-time visitor to Europe, this recent economic slump of the dollar might make a difference. For the rest of us, it's just an unusual and unpleasant plummet we have to deal with. It will self-correct eventually, but not necessarily in time for your personal visit.

This is why I am going on holiday to Buenos Aires. The devalued peso, which used to be equal to $1, is now 3 pesos = $1. I reserved a room in a 4-star hotel for just $36 a night!!!! I was told by my friend, who lives in BA, that a steak dinner at a top restaurant is no more than $16 a person, and a good seat at the Colon Theatre is about $7.50. I am the smart one.

With the War in Iraq and a trade deficit with Europe, the US dollar is going to go a lot lower before the situation improves. Personally, I think the euro could eventually go to $1.50.

Why? The US has to pay for te War in Iraq, for one thing--and for improvements in security. Despite the need to raise taxes to pay for these things, the Republicans just gave a huge tax cut to rich people. What is going to happen is that the Government will have to borrow to pay its bills. When it does that, there will be severe inflation.

All of this creates a reluctance to invest in the US due to the financial ideas of Bush & Co. Add to that, the imbalance of trade and you get a stronger euro and weaker dollar.

Each person traveling just basically will have to decide whether they are willing to pay extra for that European vacation. Some people with huge incomes will go anyway without a thought. For most of us with more modest incomes, there will be more thought and planning, cancelled trips and cheaper hotels and restaurants.

Personally, my plans include Canada, Michigan and NC this year due to (1) the crash in the international home exchange market; (2) the exchange rate; (3) the fact that trips to Europe for me are optional (I have been many times and can wait) and (4) worries about the long term investment outlook leading me to be much more conservative about spending my money. It had nothing to do with post 9/11/01 fear of flying, by the way. I have been in a plane a few times since the terrorist attacks.

There are plenty of places to see closer to home that will satisfy my vacation needs just as well as a trip to Europe. This year I will be going to drama festivals in Ontario, and doing 2 elderhostels. I am looking forward to those trips, as I will be doing things closer to home that I have always wanted to do.

The decision I made was right for me. You might choose differently--and no one should tell anyone else what he "should" do. That is personal. And, for the US tourist industry, the stronger euro should encourage travel to the US if the Europeans can get over their fear of flying since 9/11/01. They are worried about terrorist attacks too. It is a fact of life that none of us wants to be in an airplane some crazy decides to use as a guided missle. Whether you like it or not, what happened on 9/11/01 affected foreign travel everywhere.

While I watch currency exchange rates, I'm getting older. I don't fancy an exchange with the grim reaper to be in my favour. : - )

Now you know how us Canadian's feel!! Our dollar has been like this for years..but it doesn't stop me from travelling...Life is too short to worry about these types of things..We are going to Greece and Holland in September and right now it will cost us over $1.60 to buy 1 Euro..That used to be what we would pay to buy the U.S. dollar...At 1.35 to buy the US dollar now would be a bargain for us to travel to the US!! Go on your trip and have a great time.

Our Canadian dollar is not doing as badly right now.

So we bought tickets to Glasgow for September.

Ever hopeful.

I think that is what 'bank overdrafts' or 'secured lines of credit' are all about.

Live now and hope it all evens out in the end.

If the exchnage rate really bothers you - look to other places to travel - as in South America. There is more to the world than Europe - if you're a true traveler. Go where you get the most bang for your buck - sooner or later Euorpe will be a bargain again.

Just to put things in perspective, the current rate of $1.18 to the euro is equivalent to 1.67 dm (deutsche marks) to $1, which is what is was in fall of 1998. At the time nobody thought that was such a terrible rate.

Americans have gotten used to the low prices in Europe and I must admit that the Euro has driven up prices, however much our governments deny this, it's very obvious to consumers. But now I am looking forward to a cheap trip to New York! So please Mr Bush, if you continue running the country as you are, it can only become cheaper for us Europeans to visit.

The reason I am going to Spain this summer is to take a course in Spanish. Luckily I paid for the course already and that is a good thing.
I have been to Spain many times when it trully was a bargain with US dollars. I am now resigned to the fact that now I might be paying twice as much for things. I will only be there for 2 weeks and I know that I wont depleat my savings. Its just the uncertainly that is so frustrating. C'est la vie! I considered going to Argentina but I haven't been to Spain in a few years. It is such a magnificent country! Thank you for all your responses.

viajero is concerned about
>The devaluation of the dollar is getting ridiculous. I read on Bloomberg.com that the euro might reach 1.27 in the summer and maybe 1.35 buy the end of the year. Yikes!!! <

Well, the European Central Banks might decide to lower their interest rates, Iraqi oil might come onstream, deflation in Germany might cause a shift to dollars, the Saudis might start shifting their money back to dollars, the EU might decide to intervene to hold the Euro at near its initial value and the Euro might stay at $1.2.

If anyone really knew what the exchange rates would be in two months they would be very, very, very rich.

You guys are all so lucky!!!!! How about our SA Rand?? Today, 9.50euros for R1. But we're taking our family to Italy for our mid year holidays. We only live once!!! Try coming to South Africa for a great holiday - Cape Town is the place!!!

Lauren - You have some real kooky economic theories there.

I check exchange rates at www.xe.com and it states that the US Dollar is worth 1.02 Euro today?? Is this right? It was $1.17 on Friday! I keep checking it and it's changing wildly...what's going on??

irishdame:

I usually check there, too and I think they're having some problems. When I just tried to check there I got a message that they are "having technical difficulties" right now. I imagine that the $1.02 rate you got to come up is part of those "technical difficulties." The Euro was at $1.17 when I checked a couple of hours ago. Can't imagine it's dropped to $1.02 in such a short time. Now, that's not to say that I don't WISH it were true :), but, unfortunately, I highly doubt it.

Jennie

I heard an economist on the radio this morning say that the Euro is $1.19 right now and he thinks it will stop rising when it gets to a round number ($1.20) and they'll leave it alone for awhile. I sure hope that is the case, as we have rooms reserved in Rome and apartments reserved in the Cinque Terre for the first of October, and our cost for them seems to be going up almost daily!

I wish it was true too Jennie!!
And just for the record, I'd never cancel a trip to Europe based on the exchange rate, the benefits of traveling far outweigh the extra money I'm spending!

I've been to Europe in the past when it was worse than now, so it doesn't change my plans at all. I'm not a big spender when I travel, so it doesn't really make that big a difference to me, frankly, in terms of my overall vacation budget and income. Getting a vacation and going where I want are more important to me than spending an extra $25 a day due to currency valuations. Air fare is one of my biggest expenses and that's outside the euro value problem.

I wouldn't go elsewhere for that reason, but maybe for variety. i've been to Canada and just am not that interested in it and didn't find any bargains there, anyway. The fact that one CAD is worth less than a USD doesn't make things cheap or a bargain -- they just jack up the rates to make up the difference so things end up costing in USD about the same as in the US, in my experience. I can go to France about as cheap as Quebec, except for Air Fare.

To answer the headline question -- I'm going anyway because I'm renting an apt which is prepaid and have my air ticket, but if I didn't, I might consider cancelling this year if the Euro cost over US$1.50, as that would be unusually high -- assuming I thought it was some weird blip that wouldn't occur next year.

The rising Euro may well discourage some budget-minded travelers this summer, resulting in less crowded airports, flights, and tourist attractions for those of us who will travel anyway. I'm not happy to spend more, but I may be buying a better travel experience inasmuch as tourist overcrowding has been cited here as an issue in both Venice and Prague. I also hope vendors run "sales" to offset the exhange rate differences.

Okay - - I've got as much business giving investment advice as Laurel and Hardy - - but I predict that if the dollar:euro gets to 1.35 in the next 90 days, you can make book on the US stock market rising 8-15% during the same period. European (and other worldwide) investors will not be able to keep their hands off cheap American stocks. Increased demand will always result in increased prices for equities.

If you have money to put into something good and diverse (like QQQ for example), put your travel funds (or 2x or 3x) in the market, and you will cover the difference in the value of your dollars to euros.

Best wishes,

Rex

Lauren, THE FOLKS THAT ACTUALLY PAY TAXES GOT A TAX BREAK!

If I had a trip planned for this summer or fall, I wouldn't cancel it due to the falling dollar. What I might do, instead, is merely scale back the number of days I planned to spend in Europe, leaving my estimated total cost roughly the same.

That being said, I'm sure glad we decided to go to Italy a year ago when we did, when the dollar was buying a lot more.

WanderingTexan, the issue with Bush's cherished tax cuts isn't a concern that people who don't pay taxes are getting tax cuts.

Rather, the issue is -- Paul Krugman notes in his NY Times column today -- that "the tax cut passed last week will raise the after-tax income of most people by less than 1 percent . . . But people with incomes over $1 million per year will, on average, see their after-tax income rise 4.4 percent."

And this is all without reducing spending, creating huge deficits.

Krugman also quotes the Financial Times, which he refers to as "traditionally the voice of solid British business opinion" as writing, in regard to last week's tax bill, that "the lunatics are now in charge of the asylum." I couldn't agree more.

Wandering, I'm not quite sure if you understand Bush's tax plan. Since this is an anonymous board I can tell you that I am in the upper 4% tax bracket. My significant other works 80-90 hrs a week and we will not benefit at all from the tax cut. The only person that will profit is the American in the upper 1% - multi millionaires & billionaires. The CEO of Microsoft will now take home an extra 35 MILLION this year by the tax dividend scheme. With so many technicalities this new change only applies to a specific few, not the average stock holder. Now tell me, do you think the guy pocketing the 35 mil will create more jobs with his increased personal income? lol