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Value of the Euro

Hello.
I'm not very currency savvy, so Im wondering if some can help explain this to me. I saw on the news that due to the severe debt of Greece and other factors, the value of the euro is decreasing. What exactly does that mean for American tourism is Europe? I'm not sure if I should be happy that my American dollar will stretch, or be paranoid that the prices will increase to compensate for their debt.

Posted by
7710 posts

You are juggling many market pressures that are due to current currency trends, Inflation, demand, and seasonal price trends.

Generally, Yes, the decline of the Euro is good for you in the short term. Inflation will not have time to catch up, demand will not soar to raise prices, leaving only seasonal changes to dictate prices. By that I mean that it was still cheaper for me to go to Italy in February than to wait until July, even if the Euro drops by 15, 20, even a drastic 30%. However any drop in the Euro will make a cheaper trip in July than a trip in July last year.

Posted by
306 posts

The exchange rate right now is $1.33 to 1 euro. Meaning to buy 1 euro worth of goods will cost you $1.33. When I went to Italy last october the exchange rate was $1.49. Essentially you dollar goes further with a devalued euro.

Posted by
3580 posts

Things will be cheaper for Americans (and Canadians, I guess) in Europe this year. I plan to buy some extra Euros and Great Britain Pounds to bring home with me for my next trip. Probably nobody knows how low the Euro will go. In 2002, when the Euro currency was first in circulation, the Euro and USD were close to $1 for EU1. I bought Mephisto shoes at "bargain" rates. The drop in the value of the Euro means that I may upgrade one or two of the hotels I plan to stay in this year. I'm due for a little luxury.

Posted by
712 posts

Thanks everyone. Another question: for those of you who have seen the euro rise and fall in value, did it ever affect airfares, as in would airfares be lowered to attract even more tourism and bring an extra boost to the European ecomony? I'm trying to see the big picture.

Posted by
7710 posts

Like the prices you pay on other things, Airfare is affected by many things. In general, I have noticed less affect on airfare cost due to currency swings. If anything, when the Euro or Pound is high, there tend to be some deals, the opposite of what you think.

Posted by
495 posts

The thing about currency values is that they affect tourists in a different way than the rest of the economy.

A 'weak' currency is not necessarily a bad thing, it's often seen as good for the economy as it makes a countries exports cheaper (conversely imports cost more so it depends what your trade balance looks like.)

Also, just as in the US, although tourism is a big industry it's not really big enough to set economic policy (also US tourists are a small sub set of all tourists.) Most tourists in the Euro-zone are from the Euro-zone so the weak Euro make no difference, €1 is still €1 to them - and hotels and such are paying all their expenses in Euro so that's a fixed price.

Much in the same way the weak dollar of a few years ago didn't cause a massive drop in local US prices because most places deal in dollars one advantage of the euro zone is it creates a large area to do business in with out worrying about currency rates - insulating business' from currency fluctuations.

I've been on both ends of it recently with the pound against to USD/Euro a TBH it's not something to worry about. It never really affects local prices just what it costs you to convert - enjoy it when your on the winning side of the balance.

Posted by
769 posts

Keep in mind that when you exchange cash you wil pay closer to 1.44 vs 1.35 the big bank rate. figure 350-euros is just under 500$ ($497). Thats the rate I got from BofA yesterday on the website. This wont change prices in Europe - just may cost you 5-cents more or less for that beer or gelato. When you charge with your credit card or use ATM - you may get that better rate but for the most part you probably wont notice.