The Weakening Dollar

I would also love to hear any solid predictions. I'm not going to Europe in the near future, but with all the profits I can make in my FX trading account, maybe I can squeeze one in. :-)

Then change course and go to Mexico or Canada instead :-) The dollar will go much further in either place. I went to both last year and they were great value trips. Turkey is a steal right now, wish I could go again. Such is life with fluctuating exchange rates, happens all the time. I think any predictions will not be worth very much since they will be pure speculation.

You should see what's happened to the Argentine peso. When I went to Argentina in 2009, it was 4 Argentine pesos (ARS) to USD...now it's over 16 ARS to USD. It has been a wild ride. I have no regrets going in 2009. It was really affordable then, even more now.

If a trip will end up costing you more than you want (and it's a deal breaker), then it's time to cut the budget elsewhere. You can make the numbers work, it just requires some tradeoffs.

I will be heading to Italy in 6 weeks. I'm seriously considering buying about $2000 in Euros from my bank soon. Having cash in hand or moneybelt always feels good, anyway. My bank charges for foreign transactions, so the expense of buying euros in advance may not be not much if any. I think it's a 6% charge for buying euros here.

I am afraid that unless we change leadership dollar will go farther down. Very unfortunate for us who like to travel to Europe.

I know exactly what the exchange rates will do: they will fluctuate.

I know exactly what the exchange rates will do: they will fluctuate.

Too true, Alan.

I am happy we have pre-paid for some things already for our upcoming trip, but the few cents upward really is not a big deal for a trip. When you live there and your income is in US$ it is another story.

Agnes, with the exception of a hurricane or some other unforeseen event, I am scheduled to leave on Sept. 20. Too much has been planned, and cancellation carries substantial costs.

I was thinking months ago of buying Euros and English pounds because I was concerned then that the value of the dollar relative to the other two currencies might decline in value. Given that I am leaving in six weeks, that ship has sailed.

I was joking about cancelling the trip (but not joking that Mexico, Canada and Turkey are high value destinations where your dollars will go far). I wouldn't do it any more than I would pre-order currency ahead of time as a hedge. The premium you'll pay for ordering Euros will largely offset any savings. I treat fluctuating currencies as other things I can't control, like my property taxes going up by a few hundred dollars.

Futures market doesn't seem to anticipate a big rise in Euro during September and October. Prices are not much higher than today's rate. See:
http://www.cmegroup.com/trading/fx/g10/euro-fx.html
August 2017: 1.18485
September 2017: 1.18635
October 2017: 1.1889
Last quote 8-02-2017

Whatever. it has not had an effect on the most critical deciding factor on whether to travel or not : airfare and lodging

You should stop worrying about things you cannot control, especially exchange rates. Fluctuations in exchange rates will always happen and are simply a fact of life. If you are worried about your budget, then you should worry about what you can control which is expenditure. This may mean going for cheaper options for meals or accommodation.

It's always worse when I want to travel than three months before. I'm sorry.

Without getting political, the news has not helped the dollar. And I'm not sure the president wants a strong dollar.

Richard,

Exchange rates go up and they go down every day. Unless one is highly skilled in currency futures, there's no way to even make a good guess at where they will be in September. I usually don't worry about the exchange and just deal with whatever it is at the time, and make ATM withdrawals as required.

I find the forums on this website refreshing because we do not engage in political discussions, especially those I too often see and hear today. However, without passing judgment ( though I have some strong opinions), it appears that the president does favor a weaker dollar because of his views on trade.

My original post was prompted in part by an article on the New York Times website yesterday dealing with the new highs in the stock market and the decline in the value of the dollar.

Ken, I cannot disagree. And it is not a matter of whether I can afford my current travel plans (which have been largely paid for except for hotels). But I have problems ignoring the movement in the exchange rates with a trip six weeks away.

When you live there and your income is in US$ it is another story.

Tell me about it. Sigh.

As a Canadian who loves to travel, the exchange rate is always a concern

I build a buffer in our budget.... What we also do is choose to spend our money wisely e.g. on sites/experiences that are unique to where we are going... not on shopping for souvenirs/clothes/whatever else I see people buying in foreign countries that I know I can buy at home for much cheaper etc.

Virtually all predictions a year ago (and less, actually), had as at parity w/ the Euro by now, with a few models actually having the USD overtake the Euro... its like the stock market in that it really is unpredictable, especially in these uncertain times. The fed likely will raise interest rates at least 1 more time this year, probably at least twice, which should in theory strengthen the dollar, but seeing as though its been in free-fall for some time now, I would personally think the best we could hope for (especially for the purposes of this forum: travel expense) would be to hopefully find a new bottom (which could be happening now), and then hopefully it can edge up again over the course of another year... IMO that's the best case scenario. Worst case scenario is that it continues this free-fall and the new bottom is a lot lower than we all thought. Only time will tell.

Richard,

I concur with many of the replies you've received, especially with Ted's:

You should stop worrying about things you cannot control, especially exchange rates. Fluctuations in exchange rates will always happen and are simply a fact of life.

Just be grateful that the exchange rate is not worse!

In 2016 when my daughter went to study in the U.K., the Sterling Pound was close to $1.60! When I went to visit her, the exchange rate was not much better at around $1.50.

Don't worry so much about the exchange rate, instead focus on making wonderful lasting memories with your loved ones.

Wishing you a wonderful trip!

There's no point to buying euros before you go to Europe as a strategy for dealing with a weakening dollar. Even if you guess the future movement of the exchange rate correctly, the transaction costs associated with currency speculation (which is what you're proposing) will likely eat up any gains/savings you make - perhaps more. The bank will be the real winner because they get your transaction cost whether you win or lose. You need to be gambling with tens of thousands of dollars to make currency speculation worthwhile - assuming you guess correctly.

Besides, the biggest expenses for most trips are unaffected by currency fluctuations: airfare and pre-booked/paid hotels.

I don't think it political to note that the president has a preference for a weakened dollar. There are winners (export industries) and losers (travelers, consumers, import industries).

I agree with the folks who say it's been a lot worse (every time I've gone previously, it's been worse than $1.38/Euro). And I agree with the folks who suggest focusing on what you can control. Skipping a couple courses or opting for picnic lunches instead of restaurant lunches, and you're close to parity.

Predicting currency movements is a fool's errand.
Be glad the rates aren't at 2008 levels -
$1.60 per euro

$2.11 per £

"it has not had an effect on the most critical deciding factor on whether to travel or not : airfare and lodging"

Most people don't pre-pay their lodging costs, only pre-reserve, so these generally will be charged at the exchange rate on the day of either arrival or departure from the property. One pre-pay option that's guaranteed not to rise in price is a Rick Steves Tour :-)

Most people we know DO prepay lodging because of early-bird deals (AirBnB is especially popular among our extended family) and the exchange rate more recently.

Richard, your example of what the dollar was in December shows why it was the right move for us as we did just that -- prebooked in January. I remember in 2002 when the €1 = $1 (USD). So to see $1.04 = €1 was like going back in time and we took advantage of that!

This past January, we planned an 8 day trip in early October to France & the UK. We paid our big expenses already including hotels and airfare including international carriers for intra-European flights. So that the $ is weaker now is not a surprise given how incredibly weak it was 8 months ago. We knew it wouldn't last and we took advantage of it. So if meals, groceries, trams, buses and other expenses are $1.20 - $1.25 to the € in October, it won't be a big deal. We booked the hotel for the UK portion at the exchange rate of $1.21 = £1. Now it's £1.31 = $1. We were in England a few years ago when the exchange rate was $2.15 = £1 so I still think we're ahead of the curve.

Given the trends we are seeing, my trip is going to cost me several
hundred dollars more than it was when I scheduled it in the spring.

Hopefully if you prepaid your hotel and other big-ticket travel expenses, you won't have that much of an added cost.

I don't pre-pay anything unless I get a sizable price break for doing so (or when I have to, as is the case with airfares). I've noticed that booking.com and other third party sites are more frequently and aggressively stratifying their room listings by price (pay in advance vs pay on site for the same room) to promote payment in advance to get the best rates. Business hotels (domestically and otherwise) do it as well...seems like everyone wants their non-refundable money "right now" to lock in a certain future price. I don't have a problem with that (I take the bait when it's worth it) but I've not seen it done so aggressively before.

Its about a 7% jump since October last year. But that's still 7% less than October 2014. I watch such things because I have investments and cash in Europe. I'm sort of happy about it, but I didnt sweat it when the trend was in the opposite direction. So, if you already purchased your tickets; and you were to take a typical (is there such a thing) trip to Western Europe then you are speaking about a 7% increase in food, shopping and incidentals or maybe 3% the cost of the trip as a whole? Longer trips, more impact, shorter trips less impact. Central and Eastern Europe looking better now? My trips to Eastern Europe this year will end up costing me very little more than the cost of the airfare as the savings in food costs and entertainment, transportation (gas in the car) vs the US will pay for a sizable percentage of the cost of accommodations.

Most people don't pre-pay their lodging costs....

Pre-paying depends on the type of travel - individual vs group. With organized group trips, much of my cost is pre-paid, often with an initial deposit on reserving a spot then the final amount due several months before departure. And with half-board accommodations, the on-ground cost is mostly lunches, drinks and purchases.

Some Expedia booking also allow or require pre-payment at current exchange rates.

When the exchange rate is good for the USD, I take out extra Euros or Canada dollars and save for the next trip.

"But I have problems ignoring the movement in the exchange rates with a trip six weeks away."

Currency exchange is more of a concern for those of us using the Canadian dollar. There's no way I can control that, so the method I use is to simply not worry about it. In the big picture of the costs for a European holiday, a few bucks here and there is not going to break the bank so I'd rather focus on enjoying the holiday.

My only other comment is that most reserving hotel rooms are not making payment at the time of booking. Apartments rentals are a different matter, but most travellers are not renting apartments. Obviously, I book my flights well in advance. I will book some train tickets and tickets for entertainment in advance (because the risk of not buying in advance is not being able to buy at a later time). But I do not pay in advance for
hotels because the prepayment savings are not enough to justify the risk of losing the prepayment amount in the event the trip is cancelled.

In preparing and planning for this latest trip, I booked hotels, 2-3 of them, about 4-5 months in advance of the stay. Using the hotel's website, I saw the entire amount for a six day reservation in Vienna appear on the Visa ( statement) used to pay back in Jan or Feb. That is their way of giving you a special rate. Two reservations had to be made since I miscounted the days. The exchange rate was much better then than in early June when I checked out. . They told me then it had already been paid.

Agnes, I think the increasing number of listed accommodations offering better rates for non-refundable rooms is the number of people holding multiple reservations and then cancelling all but one at the last minute that they can. There was a thread about this a couple of years ago. It's especially hard on small hotels and B&Bs, which end up with empty rooms that they can't fill at the last minute.

When I arrived in Europe on May 6, I paid $1.04 per euro. When I left Italy yesterday, it was $1.18. For me, a pretty big jump.

In cities like Dresden, Vienna, Frankfurt, where the 3 or 4 star hotel offers an "early booking rate," say, 62-79 Euro for a single, which is perfect as a solo traveler in my case, and I plan on staying there 2-7 nights, I book the room using the Visa card on the hotel's website ca. 5-6 months out, prepay the entire amount, so as to get this rate. True, it is non-refundable, a total loss if anything goes amiss with your original plan to stay. No reservations are made at any other hotel for those same days...why should I? I already have the hotel I want.

If you are very concerned about price fluctuation, prepayment of as many things as possible is worth doing. Transfers, long train lines, whatever lodging. If you're concerned that plans might change, you can always a:not book or b:get travel insurance.

As this thread has gotten longer, the discussion has shifted from whether the dollar will continue to weaken in value to how to cope with a weakening dollar.

In today's New York Times, an article titled, "In the Age of Trump, the Dollar No Longer Seems a Sure Thing." Article notes that since January, the dollar has lost 11 percent to the Euro and 7 percent to the British pound.

I'd rather be lucky than good. I'm staying at mostly Airbnb's and reserved all my places earlier in the year. My train tickets and rental car were also booked earlier at a better exchange rate (but the car wasn't paid up front).

If Congress ever acts on debt ceiling and budget, the dollar will come back. I keep telling myself they will, but they don't inspire confidence right now.

I figure it is like any investment. If you continue to buy regularly, whether the market is low or high, it will at least even out, and likely make you money in the end. So, if you regularly travel to Europe, the changes in value will balance out in the end. If it is just one lifetime trip, well then it would be nice if it were low...but one's trip is unlikely to be one trip to Europe. IMO

A trend is developing for our travels in that significant savings are offered if paying for accommodations in advance. If the spread is large enough, I'll pay in advance and am doing so more often.

Wray, I am going to look at it that way too...."dollar cost averaging"! Travel is after all an investment in oneself.