xyz123

With the rise in US interest rates, if my understanding of the economics of international currency trends, the US dollar as it affects tourism to Europe should be going up.

Interesting to note, the euro is down to $1.08, although it was a bit lower during the worst of the problems in Greece. Can parity with the US dollar be all that far in the future?

The pound has fallen below $1.50. Where it stops, nobody knows.

sandralist

The lower rate of the Euro in recent months had less to do with the crisis in Greece than it did with deliberate actions by the European Central Bank to drive down the value of the euro. Almost all currency traders had long ago "priced in" even the possibility of a "Grexit". It was one of the things that allowed Germany to "win" the battle against Greece. The threat of a Greek exit wrecking either the euro or the world economy simply never materialized, even at the height of the brinkmanship.

Parity between the euro and the dollar has been the goal of several key European policymakers for some time now, but thus far it has eluded them, partly due to factors outside of Europe, party due to resistance to the ECB's manipulations in some powerful quarters in Europe.

Any number of events could spike the euro or the pound back up again, although it would need to be quite a shock for those currencies to return to the highs of 10 years ago (when the euro was worth more than $1.60).

nytraveler

You're absolutely right - nobody knows. The only currency rate you can count on is the one right in front of you at the moment.

Lots of people will guess - esp currency traders - and some will win and some will lose.

quokka

Anyone who could predict the development of currency rates would be a billionaire...

pariswat

The reasoning is good. As good as any. Then in a few months you'll have all the asnwers to explain why it was wrong.

Dukey1

The wealth of knowledge amongst bored travel agents is remarkable.

StCirq

Well, of course it's all speculative - we all know that. At the same time, it's a bit of a bonanza for those of us Americans who live in Europe. And we can fill up our cars for less than a euro per liter for diesel fuel. If nothing else it's a nice holiday bonus.

Alec

The next leading economy to raise interest rate is expected to be UK, sometime in 2016, so the drop in sterling vs the dollar may only be temporary. As for euro, while the ECB is sounding a less dovish note, they are least likely to raise interest rate in the current cycle, so continuing drop vs $ and sterling is likely.

sandralist

I don't have a car in Italy, but the savings of the plunging euro are the gift that keeps on giving if you contracted to lease an apartment at the $1.60 exchange rate and are now paying the same rent in euros, but the cost in dollars is $1.08.

I wouldn't bet on the future value of the euro because I don't expect it to last. If it doesn't, a trip to Germany will cost a fortune when they revert to an inevitably strong DM, while Italy goes back to the inevitably weak lira, making the savings to tourists substantial. But it will be ugly path getting there for Europeans, who are running out of chances to pull back from the brink

https://www.stratfor.com/analysis/it...nancial-future