Will the US $ rise again?
 

It has been very depressing trying to plan my trip to England with the exchange rate the way it is. I am still planning on going regardless (in May) but I was just wondering if there was any hope for the $. (Is there any chance it could get worse?!)

Can anyone make an educated guess? I am afraid my intelligence is not geared towards economics.

The lowest dollar rate is bad for us traveller going abroad, but is great for the export business..It was a fruitful year...

..my guess that things will NOT get better in the near future...the question is whether they will get worse..using the "McDonald" index, i wonder whether the pound is overvalued against the euro? would be inetersted in other's thoughts.

No offense (to Kismetchimera) but I really don't want to turn this thread into a "I'm glad the dollar is low" thread. I can understand why people outside of the US are happy (for the same reason I am happy when visiting Canada) But I really was hoping for some educated answers on the question I asked.
I am disabled on a very fixed income (but still it is in my blood to travel!) and I just don't know if I can afford to go if it gets much worse. :(

I don't know what the $ is going to do either, but I never let the exchange rate affect my travel plans. As a budget traveler, one would think I should be concerned, but it really is not that important in my travel planning. In 9 trips to Europe, the $ has been all over the place but I have had 9 great trips. You can make some adjustments, maybe stay somewhere cheaper, or avoid higher priced restaurants. If the $ rises between now and May - great, you have more money. If it doesn't, you have less but the important thing to remember is you're still going to England!

FromAtlanta,

In all honesty, if you want an educated, knowledgeable response to your question, you really should find a forum that caters to economist, not travelers. Any info you will get here, will be pure speculation mixed in with hope or pessimism. Of course, that's part of what economist do as well.

Yes, the dollar wil rise again! When? Who knows?

Could the dollar go lower still? Absolutely! Will it? Try the same guy!

Does a 5% difference really determine if you will go on vacation or not? If so, maybe just go cheaper - or shorter.

By May I would bet that you have some hope. The dollar has suffered such a plunge against European currencies over the past few years that it is due for a dead cat bounce, in the vernacular of the markets. Seriously, I've speculated in currencies and bonds and a quick technical analysis of the charts shows definite signs that the dollar has bottomed. But I could be as wrong as the weather man.

Hey! YOu guys are just spending money on planning trips to Europe, which is bad enough, I know. I'm paying a mortgage on French house, which ten years ago was NOTHING! Now it's 30% more - not exactly chump change. Be happy you are just European travelers and not European property owners who have to live with the enormous rise in prices as well as the crappy exchange rate.

Is it still worth it - YES!

Maybe you guys don't understand what it is like to be disabled at 30. That means I don't have much of a work history...which means that Social Security isn't paying me much.(and believe me - it is not my fault I can't work!) I don't want to turn this into a sob story - just letting you know where I stand. It is really hard on me.
I love travelling more than anything (even though it is getting harder on me physically.) I save as much money as I can so I can go. Right now I would be ok. I just started thinking what if it got a lot worse. The pound is nearly double the value of the dollar. What if it almost triples?!
I never eat at fancy restaurants and I always stay in B&Bs. Believe me, I go VERY CHEAP...and I have done this before. (but 2 yrs. ago it wasn't so bad) ... "avoid high price restaurants"? I was thinking fish and chips or sandwiches! But even that is going to cost AT LEAST $12 (I make less in a year than most of you would spend on vacation)

I'm not felling well right now and I am getting a little over sensitive. Maybe this wasn't the best place to discuss this topic. It was just something that was on my mind and I thought maybe somebody knew something I didn't. I thought if someone had some ideas they would comment-or they wouldn't.

I reread this post...I don't like I how I sound -but I don't know what else to say. I'm embarrassed, but I will post it anyway.

FromAtlanta,

I hope you didn't misread my email. I wasn't chastising you, I was giving you a true suggestion that a forum geared towards economist would be a better place to get an idea on this situation. Trust me, I would love to know myself, I'm going to London at the end of August and I have to double all the prices I read about to see how much I'm really spending.

St.Cirq,

Sorry, but I don't think you'll get much sympathy. Many of us would love to have your problem. :)

Actually, I really wasn't looking for sympathy...maybe I was throwing a little pity party ;) but I feel entitled. I've been really ill the past few days.
I don't know what you meant by your comment that people would love to have my problem. Do you mean because I don't work? I wish I could! I hate being sick all the time. Yesterday I was in the emergency room for 5 hrs. ... enough. I am embarrassing myself even more. I just want this thread to disappear.

Have you thought of going somewhere with a better exchange rate or cheaper prices than the UK? I would think that Eastern Europe or even Germany would be cheaper than the UK. Believe me, I was there in May and I don't see how anybody can afford to live there!

From Atlanta, while the weak dollar benefits some people in business, I can relate to you, as it's depressing to think about how much cheaper everything was just 2 years ago when the dollar and the euro were about the same value. For the last 2 years I have kept thinking that the next time I go to Europe it will get better, but it doesn't seem like it will happen anytime soon. I wish I could tell you when the situation will improve, but unfortunately I am not qualified.

However, I would like to share this with you. My mother has Lupus and like you, she became mobility-impaired at a fairly young age. Some days she's fine, but on some days walking is a challenge and stairs are sometimes impossible. If it weren't for travelling with her, I don't think I would have noticed how difficult it is to get around Europe when mobility is limited. I have taken her on 3 trips to Europe since she can't afford it on her own. We did as much walking as we could, then we would sit in a cafe and watch the world go by. As you correctly pointed out, it will not get easier with time, so I suggest you do all the travelling you can for now and try not to think about the cost. If you need ideas for economizing, this board will be happy to help. I have gotten so much info from Fodies on how to save money while travelling, and so can you.

For what it is worth, my friend, I admire the fact that you still have a passion for travel, even with a limited budget and challenging mobility issues. Many people would have just given up, but not you, and I think that's great!!

Best of luck to you.

FromAtlanta, The comment about wanting to have your problem was directed at StCirq who apparently owns property in France.

I can't ... because of my illness. I have to go places I am familiar and can speak the language (I get mental fog pretty bad these days) Physically and mentally I just can't try a new place right now.

Thanks for the suggestion though. :)

FromAtlanta,

>>St.Cirq,
Sorry, but I don't think you'll get much sympathy. Many of us would love to have your problem. <<

This wasn't meant for you, I addressed that part to St. Cirq. Trust me, though I won't love not to have to work, I am grateful every day for being healthy and being able to work.

Hang in there.

>>though I won't love not to have to work<<

I meant, I WOULD love not to have to work...

obxgirl, that makes sense :)

You guys must think I'm really strange! I am so sorry about this thread and the fact I keep my pity party going. I really am ashamed of myself.

Please forgive me :)

From Atlanta,

I did not realize your situation when I replied to your post. As a budget traveler, I too stay at B&B's and eat on the cheap. The problem with trying to figure out what the $ will do is there are a number of unknown factors that could have an effect. The direction of the economy, terrorism, the presidential election, etc. Any of these or other factors may or may not have an effect.

I hope for your sake that the $ does rise - I wish you well on your travels.

FromAtlanta,

The Bush administration has made a conscious decision to keep the dollar low. The Treasury Secretary has expressed satisfaction with the current situation.

Failing a change in that policy within this administration or via a change of administrations, there's little expectation that the value of the dollar against the Euro or pound will rise substantially. It's my understanding that it would not be advantageous for the dollar to weaken much further however, but who knows?

Do I know anything about economics? No. Only what I read in the paper. ;-)

Trouble is, if any of us knew the answer to FromAtlanta's question we'd be on our way to early wealth.

FromAtlanta, it seems you have England in your sights - fair enough, but you've picked an expensive place to go. There are some excellent destinations in Asia - say Vietnam - where your dollars will go a long way.

I can't see why the US administration would want to change policy any time soon. Australian travellers have been weeping tears of blood about the value of the AU$ (currently about US$0.72, but it's been below $0.50) for years, but exporters and inbound tourists have been laughing all the way to the bank.

Hasn't it ? Blame Alan !

FromAtlanta:

The short answer to your question is that it's really pretty unlikely the USD will rise significantly against the pound in the next year.

Now here's a long answer. The current state is the result of several factors:

1. The policy of the US Federal Reserve (under this Administration and under the Democrats) has been to keep US interest rates low, to stimulate economic growth. This depresses the US exchange rate - and there's no evidence Kerry at al have any interest in changing things.
2. The Euro, by contrast, is statutorily managed to keep inflation in the Eurozone low. This means relatively high interest rates in the Eurozone, and consequent upward pressure on the Euro. There is virtually zero chance of this policy being changed.
3. Additionally, traders' sentiment is that the dollar should be treated with suspicion because of America's rising budgetary and trading deficits. It's possible a new adminstration - if there is one - might change some part of this. But it's only one factor in the dollar's weakness: and the Democrats' love of trade protection is likely to push them, if they win, towards further weakening the dollar (which, in theory, makes imports dearer, exports cheaper, and so encourages US manufacturing. Even though there's no manufacturing left, there's still a lot of jobs in union bureaucracies the Democrats need to support)
4. The dynamics of why Britain has relatively high interest rates are probably too complex for this time of the morning, and are essentially about keeping house prices down. But they're unlikely to change in the next year. And the £ will always tend to move as a sort of half-way house between the $ and the €. So a strong € tends to push the value of the £ up.

Net net: whatever the US does (and all governments are more interested in trying to create or retain jobs than in making life easier for foreign holidays), what the UK and Eurozone central banks do is more important to the £-$ relationship. The best that's likely is the kind of 5% fall in the £ that actually is less important than the pricing decisions UK merchants make.

I was in the UK (London 8 - 10 and overnight on the 20th, and Hambleton Inn on 10-12 July). The cost of everything when paid for in USDs is really outrageous: the LGW express train to Victoria Station is 12 GBP, but that's $44.88 for two one way @ the 1.87 exchange rate. I paid $6.48 a gallon for petrol. The very nice Hambleton Inn was 232 GBP ($434.)per and a pint of bitters was 4.5 GBP ($8.42). The Summer Sale (40%+ off) at Harrod's was a joke as Neiman Marcus has more reasonable every day pricing.
One would think that as US interest rates rise the USD will gain on the GBP and Euro (we got about $1.24 - $1.25 in Portugal and Spain 12 -20 July vs $0.86 in '01 and $0.98+ in Sept '02). Those swings are certainly more than the 5% figure quoted on several posts and would be enough to make many folks consider other destinations. I think the GBP would have to return to the 1.25 - 1.30 range to encourage me to revisit London.
M

Have you thought of booking a trip where transportation and hotel are paid in advance in US dollars? For example, virgin-vacations.com has many such deals for independent travel. That way the only expense you have in the other country's currency is your food, museum, etc., admissions, and any souvenirs. You aren't locked in to being with a tour group unless you choose such a plan, and you have a pretty good idea in advance what your final cost will be. We had a very positive experience on the one trip we made through Virgin to Paris last year.

nonnafelice,
It makes little difference whether one pays USDs in advance or on return. We are still stuck spending very weak USDs.
That said, I did get a deal on the London Hotel with a prepay/noncancel arrangement. The Eurocar and AutoEurope prepay deals were not as great as in the past and the near last minute rates were a couple $$ less (but perhaps with less choice of cars) - I leased a large Toyota/Camery equiv in London for travel to Hambleton and back to LGW for 4 folks and a VW Golf 1.2L in PT for 2 people. I drive 5 sp cars in the US, so I save a bunch on 5 sp cars in Europe (auto trans cars may be 50% more, and the 1.2 L VW would not be drivable with an auto tranny, imho).
M

Mikemo, if you're paying £4.50 for a pint of bitter you're drinking in the wrong places!

Indeed where on earth would one be drinking to pay £4.50 a pint... the only place I can think of is at an "event" - sporting or cultural - where the captive market wouldn't stampede for the next nearest pub.

Dr D.

Late in the PM @ Hambleton Hall after a trip from London up the M 1 onto unfamiliar roads. Also, your wine prices are double or triple ours @ both retail and restaurant levels.
M

If anyone could predict the direction of U.S. currency they wouldn't be on this forum,they would be on there private jet travelling the world.

Anyone can predict the direction; few can do it with consistent accuracy.

So long as the fiscal policy of the United States is to run deficits which are financed by borrowing (either from domestic or international sources), the dollar will appear to be weak. When we resume running our budget at or near surplus (see l997-2001), we will see the dollar strengthen. When we stop giving tax preferences to the ultra-rich and shift the burden of government services performance onto the back of the states, we will continue to look like a nation with no financial discipline. Hence, our debt will grow and our borrowings remain high.

Will this change anytime soon? No.

But then my credentials are suspect, having spent nearly all my career as a banker. My career was cut short when the MBAs ran our immensely-profitable institution onto the rocks by speculation, following the advice of management "experts," and ignoring the signals reported by the little people who served our customers.

Mikemo:

You have to understand that the US government (or rather the Fed, which is actually independent of the government)is a bit player in all this. If central bank A puts interest rates up, so do central banks B and C. So relative exchange rates don't change. Generally speaking the Bank of England and the ECB have let their interest rates go up pretty much simultaneously with the Fed.

The one thing the US government can - and won't - do is to reduce your Federal deficit.

Assuming "experts" can predict currency direction is dangerous.Just ask the geniuses at Long term capital.

Will the USD rise again? Most certainly! However, this may or may not occur during our lifetimes, so take a deep breath and keep on traveling.

Actually, we're starting to think about traveling to Central and South America unless some really stunning deal to Europe pops up. There's a lot of the world we've yet to see, and Europe will still be there five years from now...

Hi,
Thank you for everyone who has replied. - I started this topic late last night (I couldn't sleep!) and it was just something that was on my mind. I wasn't expecting anyone to predict the future (or think that is what I was asking)... I just thought that some people who were knowleable in economics would have some thoughts. I REALLY APPRECIATE THE PEOPLE WHO GAVE ME SOME GOOD EXPLANATIONS OF THE CURRENT SITUATION. (THAT IS EXACTLY WHAT I WANTED!!)

I also appreciate people trying to help and suggesting alternatives for me...but (as embarrassing as it is - I was acting strange last night!) if you read some of my comments on here, you will see the necessity of me to stick with England. Plus, a big part of me wanting to go back is for religious reasons...(It involves the British Museum, but I won't get into that) I just HAVE TO GO, and this will probably be my last time :(

With everyone's answers on here, I am pretty confident that the dollar will not get much weaker, so all is well.

Thanks again!

PS: P_M, you are truly a beautiful person. I really appreciated your kind words on this thread -and my others. :)

Hi From,

There is absolutely no one who can answer your question; not even the Great God Greenspan.

However, you are planning on going to a rather expensive country.

Have you considered other countries where costs are lower - Slovenia, Croatia, Hungary?

Someone else might have mentioned this already, but, if the exchange rate is a big problem, why not travel in the USA or Canada?

They speak English in Australia and New Zealand too. (They even drive on the left side of the road, just like the UK). Both are relatively inexpensive, with the exception of the airfare from the US. Maybe you should vacation in those places, in addition to Canada.