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Currency conversion (US Dollar)

I know there are some brilliant minds out there on this board so thought i'd pose this question. I know predicting currency rates is not an exact science but just curious if anyone had any insight about future fluctuations that are expected in the currency market, spefically the US Dollar.

Was planning a trip for next May to German, Austria for about 2 days and Switzerland but US exchange to the Euro is geting worse and worse. It was $1.20 when I started seriously planning this summer now $1.46 i think today. that difference can really add up over a 2 week trip. If anyone has any thoughts or places to do good research on where our US Dollar might be shrinking further in the next 6 months it would be much appreciated. I may have to rethink some things if it is going to keep spiking up to say $1.70-80 or so per euro.

Posted by
479 posts

Michael, call me pessimistic, but as long as the price of oil is tied to the dollar and the price of oil keeps doing what it is doing and as long as the credit problems in this country continue to get worse then I expect the Euro to continue to wallop the dollar. This isn't some political mumbo-jumbo that I'm spouting off. This is what I have gleaned from reading macro-economics professionals who are in the business world every day. What most people don't realize is that Canadians on average actually make more money than Americans these days, because Canadian incomes are adjusted properly for inflation, whereas American incomes are not. Now that the Canadian dollar is nearly equal to the American dollar, Canadians who live near the border are flocking to the US to save money like Americans often flock to Mexico for the same type of thing.

Posted by
12040 posts

When our national savings rate moves from the negative to the positive, that might start to slow and even reverse the trend. Not much we can do about the price of oil, though.

Posted by
486 posts

Wall Street Journal has had a number of articles recently on the dollar/euro issues and the overall value of the dollar.
There are so many variables they mention in their articles. Will China move some of its $trillion from the US? Will the high euro begin to make Europe's products so expensive, they begin to hurt and the euro fall? Will central banks support the falling dollar to prevent the dollar falling too far? Where will oil go? Will new unknown world problems cause a rush to stability [traditionally the dollar]?
One suggestion if you want to see what the "experts" think is to look at the 30/90 day forward currency values are. This is where the money is betting. Is it up or down? The Journal has some numbers but not for the euro/dollar. Generally, it is in a little block buried in the middle of the paper. Pick up an issue and look for it so you get an idea of what to look for.
We are travelers, not currency experts. Read business newspapers to get an idea and hope you are right.

Posted by
390 posts

From what I've read, most economists estimate that it will hover around $1.45-1.50 for a while, but I haven't heard anyone say they think it will get much worse than $1.50. I'm going to Germany next May as well, so I hope it's not $1.80!

Posted by
683 posts

We do not pretend any special expertise vis-a-vis currencies or economics but it is a good bet to always assume that the exchange rate will not improve and stands to get worse. In the wildly unlikely event that the dollar strengthens this will serve to make you feel better!

Posted by
95 posts

Thanks for all of your thoughts. That exchange is definitely a drag on planning when you are trying to do things cheaply, even with hostels it makes a difference ($6-8/ night).

Hopefully it won't go any higher than 1.60 maybe, and i may base my finances off that figure. If it's lower than that next May i'm in even better shape.

I'll check out the Wall Street Journal info.
thanks again!

Posted by
389 posts

I'm with Paul n Sara. I have seen the GBP as low as $1.43 and as high as this summer at $2.05. You're right that can really dig into the budget when playing with the currency, but plan high and hope. I watch the currency on a weekly basis just to get a feel and figure it will probably come down sometime, but when has too many factors. I do know that when I was in Europe when the Euro was introduced it was $.89 for one. Wish I'd bought a bunch then ;-)

Posted by
11832 posts

Truman said, "God give me one-handed economists," because we are always saying, "on the one hand..." and "on the other hand..."

Instead of the economic answer (it could easily go either way), I'll give you the shopper's answer.

If you went to a store to buy a pair of jeans and the clerk proudly told you, "we just raised the price of our jeans, in fact they are the highest price we've ever charged," would you be in rush to buy?

That's how I see the Euro. While there are reasons the Euro might go higher, there are as many reasons it might retreat (including the US taking action to strengthen the dollar).

The only reason to buy Euros today is for insurance. If you knew that a higher Euro would cancel your trip and were willing to risk a lower Euro at the time of your trip, I'd buy currency. If a higher Euro just means you'll spend more than you would like to, I would wait.

Posted by
2658 posts

I have seen the British Pound as low as $1.14 in the late 80's. Today it is $2.10872. I really don't see it going down anytime soon.

Posted by
16 posts

You can count on the US Dollar continuing to sink v. Euro and GBP as long as the Fed continues to lower interest rates and we continue to run a US budget where borrowing is being used to finance our spending.

Lower interest rates make it less desireable for foreign entities to invest money in US notes/bonds etc. Not only are returns lower, the devaluation of their invested funds is a real deterrent.

Secondly, watch out if China and other big trade partners decide they don't want to be paid in dollars or decide to start dumping their US note/bond holdings in favor of more Euros and GBP notes/bonds.That would be the last shoe-dropping before the recession starts in the US. IMO, we're closer to this than most people think.