Catch a Falling Euro
Dateline: 5/08/00
Why should you care about the Euro?
Coins and currency bearing that name don't fall into consumers' hands until January 2002. Germans are still pocketing Marks, and Francs are alive and well in France.
But the 11 nations that opted for the Euro have watched its value fall dramatically in recent weeks, reaching new lows against the U.S. Dollar in early May.
It's troubling for them if you consider that tourists already can trade in Euros for many transactions: checks, credit cards, teller machine transfers. In short, the Euro's pain could be your gain if you spend U.S. Dollars or British Pounds on the continent this summer.
That's just the beginning. National currencies across Europe also are falling. European Union member nations like Italy and Germany are taking a beating. Even Sweden, which will not trade Euros, is seeing a drop. Is this currency market stuff starting to get interesting yet?
|
JANUARY, 1999 |
MAY, 2000 |
|
0.85 Euro |
1.12 Euro |
|
1.65 German Mark |
2.19 German Mark |
|
1.37 Swiss Franc |
1.73 Swiss Franc |
|
1640 Italian Lira |
2158 Italian Lira |
|
8.05 Swedish Kroner |
9.05 Swedish Kroner |
|
0.60 U.K. Pound |
0.64 U.K. Pound |
Scores of Setbacks
The Euro made its debut on world trading boards in January of last year. It was a big splash.
This is the currency that is supposed to compete with the U.S. Dollar, and one day that competition could be formidable. But after starting out at a value of nearly 1.18 per U.S. Dollar, the Euro was in the .90 range and even below by May of this year. It lost 12 percent of its value from New Year's Day to May Day.
The drop is hard to explain. Experts in Frankfurt point to favorable economic indicators and shrug their shoulders. Inflation is low in Europe, and unemployment is falling, too. That's enough to suggest the trend could be limited in duration. There are also persistent calls for the European Central Bank to intervene.
Americans: A Limited-Time Offer?
This could wind up as one of the craziest years in recent history for travelers to Europe.
Prices and crowds are bound to increase because of the Roman Catholic Church's Jubilee Year, especially in and around places like Vatican City or Paris.
But the Euro's steady drop coupled with the other currency dips offer hope for incredible travel bargains, too. Some strategies:
Europeans Might Stay Home
A reader in Europe planning budget trips to the United States this year is probably shaking his or her head. Adding at least another 10 percent to the cost of a trip you've already budgeted is never pleasant.
The U.S. tourist industry is unhappy too. Operators in Florida and the Northeast welcome significant numbers of Europeans.
The message to those globe-hopping Europeans: look for ways to lock in costs at rates that preceded the drop -- for example, package tours book hotels at special rates that are less dependent on market changes.
Most day-to-day lives in Europe are not affected. But Europeans are avid travelers. Those who want to escape the Jubilee 2000 crowds in Britain or America might have to pay a premium to do so.
About.com Links
Start with our Calculators links to find the most current exchange rates. Since independent travelers are likely to benefit from the drop in European currencies, also check out our links to Backpacking, Hostels and Trains.Have you already been to Europe on a recent trip and saved money because of the exchange rate? Post your experience in the forum section, or email me: budgettravel.guide@about.com
