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$1 = €1

Parity, according to the many 'analyst' who report , will come in 2017.

Posted by
12019 posts

Thank you for reminding me of how many thousands of $$ I have lost for not transferring all my funds to the States sooner.

Posted by
6392 posts

Do you have a source for this prediction?

Posted by
276 posts

It was predicted back in the early days in 2015. Today, Fortune, WSJ, Money, even a site based in England agree. Last conversion I saw had the dollar to .96 euro. Maybe I won't have bother with ATMs and convert here at home.

Posted by
192 posts

Countries in SE Asia that use the dollar have been doing $1 to €1 for a couple of years now. I exchange my money there knowing I'm going to Europe later in the year.

Posted by
3437 posts

No matter the actual exchange rate, you will always lose out if you use a bank or currency exchange. They will either give you a rate that is of their own calculation (benefiting them of course) or charge fees. The ATM option will always be the best as long as you have a zero foreign fee card to get the funds with.

And yeah, I'm upset I am sitting on lots of Euros that I could have exchanged at a much higher rate that I will lose money on spending them at the current $0.96 value. But you never know. :-)

Posted by
792 posts

it is 'catching a falling knife' ...cash out now or wait ...for what?

Posted by
20833 posts

Put it in perspective. I carry back in Oct about 400 euro. About double what I normally intend to retain. Paid around 1.10 or so while there. So I may lose a dime or a bit more - $40. Not going to kill me since I have made way more than that in the recent stock market and that will off set what I saved with Euro was pushing 1.40 and more. And it is very dependent on the US maintaining a good economy. And that is just as much a concern.

Posted by
1027 posts

Depending on your local taxes, there may be near parity now.
When I was in Europe late October to mid-November, the exchange rate was about 1 to 1.09.
Since my local California sales tax is more than 9%, and since charges in Euro include all taxes ... well, it was easy to see that it was almost identical for anything except groceries.
I came back with 95 Euros. I don't think that I will regret it!

Posted by
31137 posts

Jim,

Lucky you! I doubt that we'll be seeing anything close to that in the near future. The current rate today is about €1 = C$ 1.39.

Posted by
792 posts

sucks Ken ...but Canada is such a beautiful country and people who are tolerant. You have that.

Posted by
2907 posts

Those of us who nailed down $450 airfares 3 weeks ago and with the dollar so strong are literally looking at a European vacation costing less than a domestic US vacation (with airfare). Eating out in much of Europe was already the same cost as in the US when the rate was $1.15 = 1 euro.

Posted by
12019 posts

Dinner at an Italian restaurant in the SF Bay Area is never less than $50-60 pp. The same dinner will not cost you more than 35€ in Italy. When it comes to food, even at €1=$1.40 Italy is cheaper. Of course our prices around here in Calif. are totally out of control.

Posted by
7377 posts

SharYn, good point!

Tom, you're exactly right. A friend of SharYn's and mine, is in NYC now. She said it is more expensive than her trip to Paris a month ago.

Posted by
7377 posts

When we spent the summer in Paris in 2001, they were still using francs and it was the best exchange rate I had ever seen $1 = 7 francs. In the early 1960's to 1965, I remember $1 = 5 francs.

In 2003, when Euros were the norm, everything that had been 5 francs (70 cents) in 2001 was now 1 euro ($1 - appx). I remember feeling very disheartened at how much more everything was costing just because they switched to euros. The French were unhappy about it too.

Posted by
12139 posts

I believe in the early 1980s (1982 ?) the dollar was equal to 10 French francs, since the value of French money had devalued to that level. I brought back 600 Euro from the last trip. With the favourable air fare from SFO this time and the exchange rate now at one Euro to $1. 04, I can expect the upcoming trip starting in mid-May to be cheaper.

Posted by
31137 posts

Jim,

Yes, I suppose I should be thankful for the good things in life. To look on the bright side, It could be worse - I could be travelling in the U.K. with a 1.65 exchange rate.

Posted by
9477 posts

Roberto, It's not only CA prices that are out-of-sight. Portland is insane! We thought Rome was expensive when we moved there, but even when the exchange rate was higher, it was a better value than Portland or Seattle! Especially for wine.

Posted by
14131 posts

I guess because there are so many Israelis who travel abroad, banks here have a few ATMs with dollars and/or euros at just about mid-market rates with no fees.

I've been watching the rate since I'm going to Italy in February and Greece in April. When the euro dropped to $1.05 last month, I took €500. Then it started creeping up, so at $1.06 I took another €500. Now it's at $1.04 and I'm wondering whether to grab it while it's there (my daily limit is $600) or wait and see if it goes down. I'm also thinking of prepaying my hotels - some give a 5-10% discount for non-refundable cash up front.

I can't tell if the rate is influenced more by optimism about the U.S. or pessimism about the EU.

Posted by
12019 posts

When the Euro was launched on 1/1/1999 the exchange rate to the dollar was €1=$1.17

Posted by
4637 posts

When I was in Austria in 2002 I got 116 Euro for 100 US dollars. Dollar was that strong then.

Posted by
752 posts

YES! I like parity! This may be the best of times to trade in any Euro we've accumulated over the years. With the recent PM Matteo Renzi Referendum defeat, word on the street is that upcoming political forces may push for Italy to drop out of the EU and change the currency again!

Not so long ago it took 2,000 Lire to buy 1 Euro, effectively impoverishing the middle class! Just saying . . . .

Posted by
4497 posts

The low point of the € against the US$ was in 2001 when it was a smidgeon below 83c.

It was introduced on parity with the ECU, not the US$ - the rate then was about 0.86 USD=1 EUR.

Previous units of account for those into history (others stop here):

The ECU was at parity to its predecessor, the EUA (European Unit of Account).

The EUA was at parity with the IMF special drawing rights basket (XDR) at its creation at 1974 (although floated away after that - worth about $1.20 then).

Prior to the EUA and before the Bretton Woods agreement fell apart, the EEC/ECSC accounted in the "Gold parity unit of account", ie the amount of gold that was fixed at USD1.

Posted by
4901 posts

I suppose it might be worth pointing out that "Parity" is mainly a mental thing, it really does not matter what the numbers in the exchange rate are, but rather relative buying power in each country. That said, an improving Dollar is good for travelers, since prices in Europe likely are not increasing at the same rate in the short term, if your company sells product in Europe, then the change is not so great. Longer term, as prices balance, the actual exchange rate is less of an issue, opportunity is in the short term change.

Posted by
1778 posts

So the question is mainly...have the hotels raised prices to compensate for the devaluation? Book early to lock in prices because they will probably go up.

Posted by
12019 posts

Why should hotels raise prices as a result of the exchange rate? That doesn't make sense.
Italians (or Europeans) don't notice the price difference unless they travel to the United States. It's not that Italians every morning go to NYC to buy their cappuccino. Prices of products are still expressed in Euro. The only effect might be on imports from the US, which might cost more to Europeans. Let's not forget that this exchange rate is the effect of the US dollar going up in value compared to all currencies, including the Euro, not that the Euro is losing value compared to all currencies. Only the US dollar is stronger and the reason is both the positive outlook of the US economy and the fact that the Fed has increased the interest rate (which makes the dollar more desirable to foreign investors since the return on investment is now greater). So prices of products from countries other than the US are unaffected. The only negative effect of a strong dollar to Europeans might be that energy costs might increase, since petroleum is traded in dollars in the world market, however the variance is minimal and the price of crude is very low now.
So what is the effect of a stronger dollar? Tourists to the US will find America more expensive, therefore fewer will come to visit. American products will be more expensive to foreign markets, therefore US exporters will export less. At the same time foreign products will be cheaper for Americans, so the imports to America will increase. Americans will find it cheaper to travel overseas too. Obviously a strong dollar is not good for the US balance of payments, because export will diminish while imports will increase. American companies will also find it more profitable to relocate production overseas (so Trump ain't happy). Foreign Direct Investment will decrease too.

Posted by
1778 posts

I'm no economist but it seems if the value of the currency goes down, prices will go up. I am assuming that the dollar increasing means the euro is decreasing in value.

Posted by
12019 posts

No Richard. That is not the case.
The traded weighted value of the dollar went down significantly from 2002 to 2009, yet I bet you didn't even know.

Posted by
671 posts

It's pretty darn close: $1.04 = 1 Euro the other day. I remember a few years ago it was $1.40 = 1 Euro. 2017 should be a good year to visit Europe.

Posted by
1160 posts

Most of Italian debt is actually priced in Euro; bonds issued in dollars are usually edged by currency swap contracts. It is true that oil is priced in dollars, but oil prices are quite low now so the impact on Italian economy.
As for general prices, my understanding is that most prices are only loosely related to production costs: end consumers are charged what the market will bear.

Posted by
1531 posts

What Roberto and Lachera said. Prices for services like rooms in an area as large as the EU are dictated by market forces of supply and demand, not by the exchange rate. In fact you are probably ripping yourself off by "locking in" as many places charge you now at the presumably higher exchange rate. In some very specialized instances - for example a very small country whose hotel industry is totally dominated by tourism, you might see hotel prices rise in an attempt to soften an exchange rate fall, but this would not be possible in the EU. The only things that would be more expensive would be goods imported from outside the eurozone. Most countries actually don't mind their currency weakening as it often stimulates the economy by increasing demand for their exports, as they are relatively cheaper.

I can certainly say that from a travelers perspective - been traveling for past three months - the exchange rate has been absolutely fantastic.

Posted by
1531 posts

Hotel prices are not impacted directly by the exchange rate. There might be some indirect effects, but there is no direct relationship. Here in Hawaii, our main visitor streams are from the US, followed by Canada and Japan, both of whose currencies have plummeted against the USD over the past four to five years. Unsurprisingly - because room rates are based on supply and demand and there is still plenty of demand from both domestic and international sources - room rates have not dropped, and in fact have steadily risen for the last five years. Similarly, the EU market - comprised primarily of EU travelers and a minority of foreign travelers, will see little to no change in its room rates based on the USD to EUR exchange rates. Of course if demand falls off sharply - say a few more terror attacks or a global recession - then of course you will see room rate drops based on too much supply and not enough demand.

Posted by
12019 posts

What does the ratio of public debt to GDP has to do with the price of tea in China, I mean the price of hotels in Italy?

Public debt is denominated in Euro, not in $$, and it has no relationship with hotel prices. The results of the referendum had no effect on either.

Petroleum is traded in dollars, but the price of crude is very low now and the effect would be minimal. Also the high fuel taxes dampen the effect of petroleum price increases. The cost of crude is under $55/bbl, that is under $0.34/liter. Since the cost of gasoline in Italy is over €1.50/lt, it means that the cost of crude represents only 20% of the total, the rest being the refining costs and fuel taxes. So an increase of the $ value of 10% in Euro, would give you only a 2% increase in the cost of gasoline at the pump (assuming all of the increase is transferred to the consumer), or about 3 cents (€1.50 x 20% x 10%=3 eurocents).

Hotel prices are determined by hotel room supply and demand. Only a small percentage of tourists in Italy come from the US.

The Euro did not drop in value, it was the US$ that went up compared to all other currencies. Travelers from the Eurozone, or from areas outside the US $ (including Canadians or Japanese) will not be affected, only US travelers will.

It is questionable whether the rise in US$ value would have any significant effect on hotel prices because US travelers are a minority of travelers to Italy and most of those who do belong to segment of the population in the upper income bracket who tend to consume higher end products (including higher scale hotels). Price elasticity in higher scale products and services is lower.

Posted by
1778 posts

I probably don't remember much from Econ 101 so thanks to all who have contributed to the conversation. I guess my slim perspective of RS recommended hotels has given me a misleading representation of European economics, who knew? I have a feeling any increases in hotels from currency fluctuation would be a long term affair and probably not effect my trip next May. On the other hand, increased tourism from a strong dollar may drive demand for hotels and raise the prices. I'm just gonna forget about it and plan my trip and not try and think about economics while drinking wine in Roberto's home town.

Posted by
2907 posts

increased tourism from a strong dollar

Is this anecdotal or does this happen? I recently reserved a property in France and the owner lamented the lack of American tourists because of recent terrorist attacks. Apparently living in fear trumps saving money from a lower exchange rate?