My New Year's resolution was to stop worrying about the falling dollar even though it sunk to 127! Oh my!!!
 

I feared it would happen but my jaw dropped when I saw 127 for that Euro!!! Holy cow!!! I got an email for a hotel in Spain for a double room w/ac for 62 euro tax included which is still a good deal for the summer. It seems there are many Fodorites out there that care little how low our buck can go but damn, to a lot of us it still makes a big difference! I am not whining about this but it sucks! OK thats it! I'll try to keep this resoultion and I will if the stupid dollar doesnt plunge to 130! Then you will really hear me whine!!!!!

One: very few people here "don't care" about the exchange rate
Two: you're already whining
Three: are you trying to lose weight, too?

Anyone who doesn't care about exchange rate either has more money than they need or are rather unsavvy. Or, the third option, they simply choose not to care, even though they know that the situation has become worse. Which is something I envy, but unfortuntely I do not have the $ to get into that mindset. So, this summer, Eastern Europe here I come :) Gotta get there before the euro does!

Never mind. At least it will make my trip from the UK to Washington DC cheaper in February. Here's to an even greater drop in the $ !!!!

Hi Maletas,

The euro was originally pegged at $1.18. It is now at $1.26. That is only a 7% rise.


Do you feel better now?

RAR, you bring up an interesting point. While Eastern European countries aren't on the euro, what has happened with the exchange rate between dollars and their currencies? I haven't followed and I'm curious, but hasn't the dollar sunk against them as well??

Although I'm not in Eastern Europe, but in S. America, the US Dollar rate Vs. the Real, the Brazilian currency, has drpped 0,43% yesterday. while the Euro dropped 0,13% against the Real. One Euro is, by now, 3,62 Reais, while the US Dollar is 2,88 Reais at the moment.

Look at it this way. We live in an era of global economies. We can no longer set up an autocracy of trade, and hide from the world. Americans buy more from overseas than they sell, and that trend cannot continue forever. We are continually pumping money out of our economy and into someone elses.

The teachings of modern macro economics are that the demand for goods and services are highly correlated with the price. (For a given price, x amount of goods and/or services will be bought/sold as determined by market conditions.) If the price drops, the more you sell. As long as costs are covered, the firm stays in business.

The weak dollar means that American goods and services are cheaper relative to the world market than they are when the dollar is strong.

Therefore, given equal quality, lower priced American goods and services should sell better overseas. That means better employment for American workers.

If a weaker dollar strenthens the US economy, I think we should not complain about a trip costing us a little more.

I at least have the option to stay home!

Hi Patrick,

If you go to the currency convertor at yahoo.com yu can get rate histories.

Since Jan 2002 the dollar went from

36 to 26 Czech Koruna

4.1 to 3.7 Polish Zloty

30 to 29 Russian Ruble

260 to 188 Slovenian Tolar

So other than the Russian, the dollar has dropped just as drastically in those countries as against the euro?

I find it amusing that so many people have this perception that "eastern europe" (and what I think they really mean is central europe - Hungary, Czech Repub, Slovakia, Croatia, Slovenia) is this cheap bargain. Yes, you can still have meals as big as you head but you can also eat cheaply in "western" europe also. Croatia can be very expensive food wise, if unless you want to eat pizza all the time. Exchange rate for Croatia in 2002 was around 7 kuna = $1 and for 2003, about 6.5 kuna = $1. South America is the place to go if you want more bang for your buck. I can't comment about Bulgaria, Moldova and Romania but I'm guessing Albania might be a good bargain.

I was going to post the economics concerned, but Bob Brown beat me to it and did a very good job.

The key is to think of the big picture. First, cheaper dollar translates into more sales for US companies, more employment, good raises, etc.

Second, change the mind set that you must go to Europe or some such every year or this year. If money is a concern, then plan your vacations to coincide with currencies going down vs up, etc. Or even stay at home this year if your currency is weak.

Third, these things go in cycles. A couple of years or so ago, the Euro was something under .90 to dollar. So again, just plan to go with the cycles.

Fourth, in some of the top restaurants and hotels in eastern europe, the menues are priced in USD, while payment in made in the local currency. In that fashion, holders of US currency are never hurt (or helped) by the relative strength or weakness of USD

Hal and Bob, when are Americans going to see all these good raises? The dollar has been falling for a while and most people we know in the U.S. have received no raises at all, let alone "good" raises, despite the fact that they are working harder and more productively than ever. And this improved employment--so far, the weak dollar has NOT translated into lots more jobs paying living wages with decent benefits (the kind people had when the dollar was strong a few years ago). These new weak dollar jobs are mostly minimum wage or slightly better, with few if any benefits.
A weak dollar is not going to translate into huge economic gains for the U.S. when you can still buy products (and labor) from Asia for a lot less.

AR: Enjoy your trip to the US........as a Canadian and having to pay $2.31 for your British Pound and $1.63 for the Euro, I am staying home. There is better value for my dollar right here in Canada.

BTike, the US wage sitation is not as bleak as you asserted earlier.

According to a survey of more than 1,000 companies by consulting firm Hewitt Associates, raises were expected to average 3.9 percent in 2003 for salaried salaried, nonexempt employees; and 3.8 percent for nonunion, hourly workers.

In 2002, average reported increases were 3.5 for salaried employees; and 3.5 percent for nonunion, hourly workers.

In both years, wage increases outpaced inflation. And polled employers were also optimistic that wages gains would continue to increase in 2004.

I'm not sure what is your source is for your assertion that " these new weak dollar jobs are mostly minimum wage or slightly better, with few if any benefits."

maletas,

Repeat after me: "It's beyond my control."

Will it stop us from travelling? heavens, no. We'll just spend less money on food and trinkets.

Hansikday, that's good news for the 1,000 firms that were surveyed but what about the others that were not surveyed? For example, I work at a law firm, began there in 2001 just before the bust, was making alot more before so I took a pay cut when I began. Before the unexpected downturn, I was looking to recoup my lost wages within a year. The economy went down, 9/11 happened, the law firm started laying off. Needless to say, there was a salary freeze since then and until now. I've been three rounds of layoffs.

I forgot to add that the big corporations have been laying off alot so that matters too. My husband got laid off 6/03 after 20 years at the same corp. He, like many like him, hasn't found another job yet.

Yes the dollar has slipped to those currencies as well, but it's still far and away the better deal (East vs West)! I was in Czech Rep when it was 30-1 rate and it was still ridiculously cheap.

Let me ask, will your worry and worry make the dollar go back up? There's nothing you can do about the dollar going up or down.

The only thing you have control over is whether you want to spend the extra money it ends up costing you and if you can't afford it.

Oh, by the way, something tells me that you can whine 24 hours a day and the dollar exchange still won't change just for you.

Yawn!

We got a notice from Doorways that we owe another 123 (USD) on the apt. we've leased in Rome due to the dropping dollar. We're expecting the same from our other venues. I keep asking my husband if he wants to change his mind about going to Italy this summer due to the dollar and terrorism threats. He still wants to go.

Our oldest daughter will be going off to college on an athletic scholarship (which means she goes early) in 2005, so this probably our last chance to go as a family. Some things you just can't put a price tag on.

If we go broke, hopefully one of the three kids will pay for a nice nursing home!!

Maybe daughter can sign to play quarterback for Dallas . . they need the help and she could pay for your trips! !

Rich

Or running back. She could probably run better than Teresa Hambrick.

The dollar hit a new low against the Euro today. Maybe this quote from Bloomberg will make you feel better:

"The euro's 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."

Jayne11159 wrote
>We got a notice from Doorways that we owe another 123 (USD) on the apt. we've leased in Rome due to the dropping dollar. <

Did you give them a deposit in dollars? Are you paying them in dollars. If they quoted you a price in euro, and you are paying in euro, there is no reason why a falling dollar should require you to pay more.

bob brown..you're spot on.
i just heard the same explanation on cnbc:
upside: the anchor said this is good for american businesses who sell overseas..they'll sell more since goods will be cheaper, meaning the american worker keeps his job (of course not all, but that's another discussion).
downside: yes, not so good for the american tourist. but cnbc anchor added that the dollar has been so strong for so long, the current fall of the dollar is really not a huge concern (at least for now).

Ira, I think maybe you're missing the point of Jayne's comment. If the apartment said it was 1000 euro and they are paying in euro, it still could be $123 more to them since it will cost more dollars to get those 1000 euro. And although some places will quote in dollars and let you pay in dollars -- those are usually clearly stated to be tied to the euro and adjustable. So if the place quoted them $1000 back six or seven months ago, it is understandable if they now say it will be another $123. Normally within their information will also be a price in euro, which remains the same, but if the people are paying in dollars, of course they will now have to pay more.

I'm glad my Paris apartment is not only quoted and paid in dollars, but paid to the owner in the US. No chance of that changing on me. My two apartments I'm renting in Italy are both quoted and paid in euro. Of course the prices will remain the same, but I already see how much more they are going to be costing me in dollars since I orginally booked them.

I'm not sure I understand that point about the apt., either, as even if it costs Jayne more to buy euro, the landlord shouldn't be demanding more money if she pays him in euro because the $ drops. Maybe she is paying in USD and there is no price guarantee but that's odd because if I prepay and buy something, I don't expect the seller to come back to me a month after I've bought it to ask for a price increase due to currency fluctuations. But maybe she agreed to prepay but pay constant currency changes? huh -- let's see if the landlord refunds money if it goes down (right).

First, it was only officially $1.26 today, not $1.27. Anyway, it's still better than the USD value in 1995-1996.

Cheaper American goods does not automatically mean that people in other countries will buy them - other factors such as quality and consumer loyalty influence a person's purchase. Being that 2/3 of our economy is based on consumer spending I think its interesting that this administration is now looking to other countries to keep us going - could it be many Americans have max out their credit cards, cashed out the equity in their house and spent that $300 tax refund? Ultimately the solution is cut back on how you spend your $$$ and make more $$$. (I'll admit that South American is starting to become a more attractive destination.)

Doorways is based in the US so we paid our deposit in USD and the balance increased due to the dropping dollar. If we had paid in full when we booked it would have been their "tough luck". Since we didn't, it's ours. Patrick makes a good point and you can be sure that this week we are paying the balance on this apartment. Our Tuscany apartment won't accept early payment (due to the drop I'm sure). Same in Switzerland, although they're still using CHF.

Rich and RAR--my daughter is a 110 pound volleyball player so I'm afraid you'll have to look elsewhere for help--but I'm afraid it's too late!!

Ira, when I last went to Paris (April 2003) the it was $1.08 to the euro. So with the rise to $1.26 or $1.27 that represents for me of about 17%. That's a LOT! I was planning on taking my kids this year and was budgeting very stringently. What I was hoping to be a $5,000-$6,000 trip may turn out to be $5,850-$7,020. The budget is so tight I doubt we can swing that right now. So we'll wait 'til Christmas hoping it'll drop (or we can build up more cash).

Amen, BTilke & marktynernyc!

My daughter is getting married in Italy in June. All the family is going and plan to travel after the wedding as well. The falling dollar is stressing me out!