And the dollar's a lot stronger against most currencies, except the Yen. Folks are talking about possible parity again with the Euro by next summer. That would certainly get me to book a trip.
Canada is also MUCH cheaper all of a sudden -- about a 30% move since early summer.
It's all swings and roundabouts. I got back last night from about 10 days in the UK. I know I spent less money on this trip than I usually do on my UK trips. I spent a few nights staying with friends, didn't go out for as many meals, didn't go to any shows in London as my schedule was always full. I had a great time, but I feel like I didn't spend enough money!
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After some really bad years, it's nice to finally see the dollar go back up a bit. Hopefully it's not temporary. I guess the markets have factored in the incoming president into the market.
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The USD has been rising for a couple of technical reasons.
1) Investors/speculators unwinding commodity positions (as prices fall) and the stuff is denominated in USD so the USD rises as the commodities are sold.
2) Capital shortage/rationing as banks are holding onto cash and as multinationals deal in USD for financing, the value is being chased by scarcity.
Wait for the credit crunch to subside and the fundamentals that devalued the USD over the past 5 years will return, and with a vengeance given the additional $5-6 trillion debt of Fannie Mae and Freddie Mac now assumed by the U.S. government but conveniently kept off the books and the even-larger budget deficits (compared to the past few fiscal years).
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We vacationed in Europe last summer at the very time the Euro was at its peak against the dollar ($1.59 IIRC).
While I'm excited at the prospect of cheaper future travel abroad, our business has been enjoying a surge in foriegn business that is entirely due to the weak dollar. The specific products they are buying from us are available to them locally--it's just that they are temporarilly cheaper here because of the exchange rate, so many foreign buyers have been sourcing from us to take advantage of the lower cost. That will subside if this continues.
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Running a complete long-term business plan off currency fluctuations is a great recipe for a quick heart attack and short overall life-span . A drop / increase in currency value for sure helps / damages the business if you are mostly selling/buying outside, but with strong-valued product and reasonable planning, it should not be a life-or-death situation. Just my $0.02 that is.
The USD has been rising for a couple of technical reasons.
1) Investors/speculators unwinding commodity positions (as prices fall) and the stuff is denominated in USD so the USD rises as the commodities are sold.
2) Capital shortage/rationing as banks are holding onto cash and as multinationals deal in USD for financing, the value is being chased by scarcity.
Wait for the credit crunch to subside and the fundamentals that devalued the USD over the past 5 years will return, and with a vengeance given the additional $5-6 trillion debt of Fannie Mae and Freddie Mac now assumed by the U.S. government but conveniently kept off the books and the even-larger budget deficits (compared to the past few fiscal years).
So true! This is a great opportunity to buy some Euros, as a 1.60:1 $:€ ratio is a much more likely scenario in the future than is parity. I'm not saying that we won't be seeing a further decline in the Euro's value over the next few weeks/months, but fundamentally, you're getting a great deal when exchanging dollars to Euros at the current rate.
So true! This is a great opportunity to buy some Euros, as a 1.60:1 $:€ ratio is a much more likely scenario in the future than is parity. I'm not saying that we won't be seeing a further decline in the Euro's value over the next few weeks/months, but fundamentally, you're getting a great deal when exchanging dollars to Euros at the current rate.
I'm not so sure about that. Frankly, I wouldn't be making ANY long term currency bets here. There is no FUNDAMENTAL reason for the Euro to be worth more than parity against the US dollar. No where is it written that prices should be more expensive in Europe.
I just know a lot of people who lost money in the commodities market because they thought "it was different" this time.
The specific products they are buying from us are available to them locally--it's just that they are temporarilly cheaper here because of the exchange rate, so many foreign buyers have been sourcing from us to take advantage of the lower cost. That will subside if this continues.
Well, that would suggest by itself that you didn't have a long term business.
It is a shame that our markets are so incredibly unstable these days. Hard to plan for anything. After this financial crisis shakes out though, I do expect things to become a bit more stable. Lots of deleveraging going on, which is a good thing (meaning speculation will be reduced).
