Will the Euro go down?
 

We are leaving sept 13 for 16 nights in Europe and I was just wondering what others think the Euro will do. when I started planning this trip the Euro was at about $.85
per USD then went down to as low as $.80 per
USD. Where do you think it will be! Thanx.

My Lord, BB.

I thought I was an early planner.

You may rest assured that the euro will be somewhere between 1.15 and 1.30 USD.

I started planning in May, was that to early?

A really good forex dealer can tell you what an exchange rate will be in five minutes' time. And many of his strategic advisors will be pretty accurate about rates in six months' time.

But none of them are trustworthy about rates in two weeks, except under very extraordinary circumstances, like a government trying to defend a totally unrealistic rate. And even then they often get their fingers burnt.

The only sensible assumption under most circumstances is that rates in two weeks' time will be pretty much what they are right now.

For what it's worth, though, I'd say the fundamentals push towards further dollar decline against the Euro, unless someone changes the laws of economics.

It seems to me that the people in Europe
must make very good money, I have been looking at the price of things over there to get an idea what we will have to spend on our vacation and damn everything is expensive, laundry mats,
Restaurants, hotels, fuel, cigarettes,
parking, etc, etc, I have saved enough for all the stuff we want to do $10,000
for just under 3 weeks. The wages in Europe must be very good to live there
and still be able to go out.

"I started planning in May, was that to early?"

No, it's not. I think ira was reading it the way most people in the U.S. express it because of the "$" sign in front of the number. Your trip is fairly soon and the Euro has been sitting at $1.20-$1.23 U.S. per Euro. It probably won't change a LOT between now and your return as fundamentals tend to be factors that have an impact over longer period of time. An easing of world oil prices, an escalation of tensions, stock market fluctuations and a myriad of other things could move the exchange rate one way or the other -- but the chances of anything having a material impact on your costs from this point forward are probably not all that great. My suggestion: give yourself a somewhat conservative scenario of $1.25 per Euro. You could come out doing slightly better than that forecast and it covers some level of exchange costs.

There are many different prices! I don't know how many of you are traveling, but for two of us $10,000 would be at least double what we have ever spent on a just under three weeks trip to Europe. You should have a wonderful trip. But we have had wonderful trips also! (If there are many of you traveling for $10,000, of course, my remarks don't apply!)

That amount is for 2 people and includes
airfare, car rental, travel insurance,
all 4 or 5 star hotels, 1,000.00 Euro
for food, sight seeing etc, etc, I am not saying we will spend that much however, I will have that much funds to spend if needed.

It is never too early to plan and you should never feel you have to defend yourself in terms of how much you paid, or are going to spend for anything since those decisions are purely personal.

As long as the current political administration continues to pursue its very well-publicized 'weak dollar' pol;icy designed to attract foreign investment and reserve severe balance of trade deficits, the cost of a Euro will remain "high" for many people.

Trips to Europe cost money, in some cases much more than folks feel than can, or should, afford..but we all seem to find some way to get ourselves there.
Some of the things you will think are "expensive" probably don't cost any more than a night or two at the movies in the US including the OUTRAGEOUS cost of popcorn...but the memories will last forever.

Have a GREAT trip!

So true are your words. We went to the movies last night (CATWOMAN) $9.25 each,
shared 1 large popcorn and large soda
$7.50 shared 1 box of sour patch kids
$4.00, $30.00 to see a movie and the movie sucked. LOL

Hi bb,

>I started planning in May, was that to early?<

In May, 2004 the euro was $1.19.

Ah, thanks flyboy.

>....the Euro was at about $.85
per USD then went down to as low as $.80 per USD.<

Did you mean that it was 0.85E/USD and that it went UP to 0.80E/USD?

bigboy,
My European friends get by with fewer purchases.
Dutch ride bikes & public transport.
French have a small closet of very fine & beautiful clothes.
Germans & Austrians make a fine home for themselves and enjoy it to the utmost with friends and family for cheap, yet priceless, entertainment.

In general I've seen people not only "get by" on less, but have a better quality of life IMO.

Taking a "European holiday" with other Europeans is not like holidaying (not sure if that is a word, but it should be!) with fellow Americans. Both are fantastic in their own way, but very different.

If you want to try something different next time, look into renting a small apartment with kitchen when you travel. This could cut your travel costs in half or more & may surprise you as more comfortable, fun or entertaining.

As to the central issue, I have a bunch of Ausies and Kiwis working for me that get paid in US dollars which they then convert to ausie dollars. Their income has dropped dramatically in the past year or so and they have bad habits to support.

Regards,
Craig

I mean when I started planning this trip
for $100.00 US dollars I could buy 85.00
Euro and it has went down to as low as
80.00 Euro per $100.00 US dollars now its about 82.50 Euro per $100.00 US dollars

bigboy72712

In fact, you're incorrect - it's not that europeans make a lot of money. It's that most everything in the US is very cheap compared to the rest of the world. Our salaries have incredible buying power vs may other places - we have the cheapest food in the world, electronics and household goods are often half the price of what they are elsewhere and the price of cars is a joke. (I was in the UK last year and they were touting the best prices of the year - selling a Honda Accord for 20,000 pounds. Imagine more than $32,000 for a basic family sedan - who here would pay anything like that?.)

The fall of the dollar has only exacerabated the situation - but the basic fact is that we're the ones that have incredibly low prices (in terms of salaries) vs everyone else.

I'll be the first to admit that due to the falling of the dollar, things cost more now in Europe than they did a couple years ago, or even a few months ago. But people get way too hung up on the exchange rate. When we were talking lira with thousands to the dollar, people were never concerned with the rate being up or down. Somehow since the introduction of the Euro people seem to think they are supposed to be equal, and if it cost more than a dollar to get a euro then that's terrible.

This summer we spend three weeks in New York, then almost three months in Europe, then a little over three weeks in Oregona and California. Clearly New York is where we spent the most, then Oregon and California. Europe was still a bargain compared to the others (and yes I'm talking the bigger cities -- Rome, Paris, London).

Better than looking at what the comparison between the currencies is now compared to before, just focus on what it's really going to cost you. I can still find a beautiful hotel room in Paris for about $150 -- way less than a similar one in New York. And I can get a great coffee latte in Rome at the corner for less than half of what I pay here at Starbucks.

I just wish people would stop trying to make the dollar and the euro equal -- they happened to be for a short while, but that is beside the point. Now if I could just get those Canadians to stop thinking that everything cost them more because they keep trying to pretend our dollar and theirs should be equal, I'd be really happy. If one more person says, "it's not so bad for Americans, but it costs us a third more. NO, IT DOESN'T. It costs you the same -- you just have different currency!

You are leaving in just over 2 weeks. Does it really matter how much the exchange rate varies between now and your departure? Will it cause you to change your travel plans?

From looking at the history of the interbank exchange rate on Oanda since May 1, rates have ranged for USD to EUR from:
Average (119 days): 0.82259
High: 0.84930
Low: 0.80220
If you go back to 1 Jan 03 the range is:
Average (605 days): 0.85773
High: 0.96740
Low: 0.77330
If you go back to 1 Jan 01 the range is:
Average (1335 days): 0.98421
High: 1.19770
Low: 0.77330

How will this change your travel plans?

I'm going to London in October. Until now, I haven't checked the exchange rate for $ to £ in months. I now see that the rate for USD to GBP has fluctuated a bit since last October when I was there:
Average (332 days): 0.55865
High: 0.60480
Low: 0.52230
Last year, it was at 0.60090 on the day I returned home. Today, it's at 0.55680. (Or, last year one GBP was worth $1.66 and today it's worth $1.80.) I'm going anyway. I mentally use a factor of $2/GBP for my planning anyway so if it goes up, it goes up. I can stress about it but since I can't change it, that seems rather pointless.

Patrick,

I understand completely what you are saying. - When I travel, I like to look around "grocery stores" (it may seem weird, but I find it a perfect way to understand a culture is by what they buy ;) ) Anyway, I know people keep saying how London is so expensive, but I didn't find it any more so than a big city in the US. If there pound is like our dollar to them, then they are paying about the same for cereal, eggs and milk etc. that I pay. When I go out to lunch here in Atlanta, I pay an average of $8. Guess what- it is an average of 8GBP over there too. ... So it may be expensive to ME, but NOT to people who live there. It's all relative.

Hi

The fact is the € has gone down! Earlier in the week the € was at 1.238 but today it's 1.207!

Greenspan speaks today but, the facts are that growth has slowed, coupled with oil prices rising again and the uncertainty on our GDP in the 3rd quarter, will probably make the € stronger again.

FromAtlanta : What you are saying is even truer if a Londoner in your position also earns the same as you, (dollar for pound). Does a pharmacist or doctor or construction worker or bus driver in London make the same number of pounds salary as that same occupation would in the USA in dollars ?

bigboy,
We just returned from Ireland last week. ATM withdrawals were at around USD1.23 per Euro; credit card purchases were about $1.27. So you can save a little if you pay cash for your purchases.

However, I don't think your budget of $1,000 will cover 3 weeks of meals & sightseeing. We (2 people) spent about that much in 9 days.

The dollar is likely to keep getting much worse versus the Euro, not only because of the lower interest rates in the US, but the US need to improve its trade deficient. Some economists suggest another 30% swing is necessary.

Us US tourists traveling to Europe just make things worse.

Keith

>If there pound is like our dollar to them, then they are paying about the same for cereal, eggs and milk etc. that I pay.<

The difference is, however, that the median income in the UK is about 65-75% of the median income in the US, ie, wemake 37,000 USD, they make about 27,000 GBP.

In addition, housing costs are much higher.

Keep in mind that in economics, as in life, there are almost always trade-offs. The drop in interest rates by the Federal Reserve helped to jump-start the economy after a recession. It also saved the average American a huge amount of money by making home purchases more affordable (lower interest rates), and letting others refinance. The boost in the housing markets helped construction workers, electricians, and anyone involved in any business that sells home-related merchandise.

The low interests rates also make American exports much cheaper overseas, so this will help Americans who are employed in trade, and the increase in export sales helps to minimize the trade deficit.

The drop in interest rates directly affects employment in the U.S. (helping people get jobs). The high interest rates by the German Bundesbank keeps unemployment in Germany over 8%. (There was a recent reality TV program in Germany, where the Grand Prize Winner was awarded - a job.)

The exchange rate will probably improve as the U.S. economic recovery continues. Interest rates are abnormally low, and the Fed is sure to keep raising rates so long as the economy continues to grow.

More a piece of philosophy than any kind of answer... I don't worry over things I can't change. I don't convert every purchase I make back into USD in my mind. Use your ATM card upon arrival and proceed with your fabulous vacation. If your money seems to be going to fast, eat a cheaper meal or skip a costly tour, or something.

Because the original poster's trip is only a couple weeks hence, I can't imagine things will change too much... so my answer to "where do you think it will be" is it really doesn't matter.

Bigboy -- I think that the biggest savings we had (compared to you) is with 2 and 3 star hotels (instead of 4 and 5 star). I also agree with someone above who said that 1000 euros for food and sightseeing is probably not enough. If you reduce what you're spending on hotels, you'll have more for food and sightseeing. (We also do not rent a car -- only use public transportation, but I don't know how much that saves us.)

bigboy72712, my son and I were on a budget just recently and we spent the following:
Airfare between all cities - whatever
Hotels - whatever
On the ground (all other expenses inclusive) -
929 Euros for 12 nights in Paris and Berlin
200 pounds for 3 nights in London

This was comfortable enough but definitely on the spartan budget side.

Europeans do not generally make better salaries than Americans or even Canadians. They do have fewer cars and smaller homes, generally speaking. You can take a look at some UK and European job sites to see typical salaries.

In re-reading this thread it surprises me that someone who chooses 4 and 5 star hotels only then worries over a few cents on the dollar. If you dropped a star or two you'd save way more than enough to make up for any currency fluctuations.

I used to think similar things when I first traveled to France many years ago, but from being there more and not just doing touristy things all the time, I know feel that things aren't that different in cost from the US, and some are cheaper. I mean everyday things, like groceries, movies, etc. Restaurants don't cost more than the US, Bigboy, at least not anywhere I have been except England. The only big differences I notice are really cheap discount store stuff, and even that is getting better, for some reason. For example, just buying cheap underwear or socks or something in a Monoprix used to cost you about the same as US $4-5 each. Now, you can get some things cheaper, but I still don't see it like in the US where you could go into Kmart or something and get decent socks for $1-2 a pair.

I also remember I wanted a cheap desk lamp and pillow because I was staying longterm in a dormintory without good lighting and only those French bolster pillows. Well, in the US, you could also buy some cheap lamp for $10, as well as a cheap pillow, but I couldn't find anything in Paris like that for less than about US$50. That was in 1988, though, and you can do better now in getting stuff like that in Monoprix or wherever.

Gas is obviously more expensive, but I don't know about cars in France. I think I've seen prices and they weren't that different than in the US. I know England is a different case and I've read even English people go to France to buy cars for that reason.

Anyway, bigboy, you've chosen to spend so much money on expensive hotels -- which is obviously your preference and choice -- so I am having trouble placing your concerns about minor cost fluctuations in context. Just doesn't make sense to me.

Leona & Kristinelane, I think bigboy said 10,000 not 1,000 for the trip. He should be fine for 3 weeks with ten grand!!

Bigboy, wanna take me along?? :)

Have a great trip!

big Boy - where the heck are you staying? We went to France and Italy Last year for two weeks (EUR-USD 1.18-1.24 during our trip) and we probably spent $1700 USD on hotels total? Sure we did not stay in 4-5 stars but mostly 3 and they were all nice. No reason to stay in a 4-5 star hotel. I thought food was cheap (even with the falling dollar) and wine even cheaper.

As far as the EUR-USD. it should remain realitivly constant barring any exrodarary evens until the NOV election. Then you will likey se change. Kerry and Bush have Radically differnt economic policies. if Kerry is in office you will see the dollar rise in the long run, bush it would slighlty decline. This is beacuse of the strategies used to encourage growth.

Keith - 30%, no way-not a chance. The central EU banks will start invesing in Dollars(like the japanese are now) before that would happen

to tpattricco:

Read it again please. He said 10,000 for the whole trip, but 1,000 for food and sightseeing.

Hi bb,

This is not a value judgement. just a comment.

>...1,000.00 Euro
for food, sight seeing etc, etc,<

Our traveling styles are definitely polar opposites. You stay in 4 & 5* hotels and spend less than 35E pp/day on food and etc.

We stay in 2* hotels and spend at least 75E pp/day on food and etc.

Help me here... it's a 3 week trip for 2 people, 9000 euro airfares, hotels, car rental + only 1000 allowance for food & entertainment?

The 10000 total sounds extremely generous, but the 1000 food allowance sounds skimpy.

Ok here is what i was trying to say.
$10,000.00 Total budget. airfare,, car rental,, 4 or 5 star hotels,, 1,000
Euro JUST for food,, sight seeing,, etc,etc, I also said thats how much we are allowing for the Whole trip, if we spend it, we spend it, no worries to us because we have that much in our budget.
I was asking a simple question "WILL THE EURO GO DOWN" thats all. I am not a penny pincher by no means, I spend $10,000.00 on vacation DO YOU?? the fluctuation between the Euro and the Dollar by as little as 5% is alot of money when your talking $10,000,

Based on my low-budget figures above, I don't think 1000 (even in Euros) for food and sightseeing is enough for two people for 3 weeks.

I agree with WillTravel, 1000 is not enough for food and sightseeing for two people.

1,000 FOR JUST FOOD! NOT INCLUDING SIGHT SEEING.

I'd figure AT LEAST 40-50E per day per person for food and drinks. It adds up quick even if you do some picnics and skip lunch some days.

OK~ JUST FOR FOOD... 1000 divided by 21 days, divided by 2 people is less than 25 euro per day. That is WAY low for a 10,000 5-star kind of trip.

No one can answer your question "Will the Euro go down?" because no one knows the answer.