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Down, down, down goes the Euro


The incredible shrinking euro  (White & Assoc. LLC graphic)

By David Stewart White
Examiner.com
June 4, 2010

The euro is sinking.

What started as speculation that Greek government debt could start a run on the value of the European common currency, has become a reality. 

While much of the discussion has been steeped in economic theory, there is a more practical impact for Americans traveling to Europe this summer: the cost of a European vacation has dropped.

During the past decade, the euro has steadily gained in value against the once-dominant US dollar.  As the year 2000 dawned, the euro and the dollar were essentially at par.  By October of that year, the euro had declined to US$0.84 and American visitors opened relatively fat wallets on European jaunts. But starting in the Spring of 2002, the euro began to climb in value against the dollar, making European vacations ever more expensive for traveling Americans. In the summer of 2008, the euro shot to nearly US$1.59.  Even without inflation, the cost of traveling in Europe had swelled by almost 90 percent.

 


Euro against US dollar in 2010 (White & Assoc. LLC graphic)

It's been a bumpy currency ride since mid-2008, but the overall trend has been a decline in the value of the euro against the U.S. dollar.  At the close of 2009, the euro was worth just under US$1.44. But when the Greek debt crisis came to light in early 2010, the euro began a downhill slide, accelerating as economic concerns spread to other European Union countries.

As this article is written, the once-lofty euro hovers at US$1.20, with no bottom stop in sight. The value of the euro has dropped by almost 17 percent since January, 2010. 

The bottom line for Americans planning to visit Europe? Unless inflation rears it's head, a 2010 European vacation is a (relative) bargain.

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