Ess

I'm not a financial genius, but I was just wondering whether the wonderful exchange rate we Americans have been getting over the past couple of years in Europe will be less wonderful after the euro comes into general use in 2002. Does anyone have any thoughts or knowledge on the matter?

Sjoerd

It is impossible to have "knowledge" on this matter. Even the so-called specialists have been consistently wrong in predicting the euro-USD exchange rate over the last years. <BR>Your guess is as good as anyone else's guess. If you are still interested in my guess: I believe the euro will go up about 10-15% to the USD until mid-2002.

Ess

Hi, Sjoerd. I know it's impossible to predict - otherwise we'd all become enormously wealthy trading in currencies! I guess I'm just curious about what's going to happen. It's hard for me to fathom one currency for all of Europe, one exchange rate. As I said, I'm not knowledgeable about economics, which is why I was interested in hearing others' points of view. Thanks for the reply!

s.fowler

Disclaimer -- this stuff isn't my specialty Like I'm clueless?? <BR> <BR>What I understand is that since all the cxurrencies are already pegged to the euro, there is, in effect one exchange rate already. At the moment the dollar is weakening a little [down from 7.8 to 7.4 FF for example -- the current currency I am watching] My bet [see disclaimer] is that once the euro is a reality there will be a psychological boost from actually seeing the one currency.

janis

The final conversion to the Euro will probably have little effect on the exchange rate. As said previously - all the member currencies are already tied to the Euro which is trading in the 86 to 89 to the US$ range. <BR> <BR>A primary factor is the cost of money in the US (The interest rates) - if the Fed maintains relatively high interest rates the $ will trend higher, and if the Fed lowers rates significantly the $ will go down. But they (the monetary experts) never dreamed the EURO would trade in the range it is now - it was thought it would never go below parity (1 to 1 to the dollar). <BR> <BR>The Euro is the main reason your trips to Europe have been such bargains for the last 12 to 14 months.

janis

Oops - make that .86 to .89 to the $

Ess

Thanks, Janis. That makes sense. Sally, who is it you think gets a psychological boost? Sorry, don't mean to be dumb. Do you mean the Europeans?

s.fowler

Well I told you that this isn't my area -- but yes -- it seems to me that to all of a sudden see that you are bigger than your one country might lead to an upward bounce. But, as I said....

Christina

i will guess it will be about .90USD based on my limited knowledge of world economic conditions. A lot of foreigners, even countries, I think, are investing in US dollars; I believe the Euro was supposed to help that situation somewhat, but hasn't as envisioned, and of course the US interest rate affects it. Our economy has recently been a little more stable instead of leading indictors going the wrong way, so I'm going to bet about .90. Those are my thoughts and I'm sticking to them, but I have no knowledge.