Tuesday, May 01, 2012
Posted by David at 4:35 PM
But then I look at the exchange rate numbers. Let me explain. An exchange rate is the price of one currency in terms of another. One U.S. can buy 0.62 British pounds or 81.4 Japanese yen. The more currency you can buy, the less valuable the currency. A weak currency is good if you're traveling. Imagine being able to turn one dollar into two or three of four. Yes, some stuff will cost two or three or four times as much, but on the whole it doesn't completely cancel out the exchange rate. So when I read about Greece protesting austerity measures, Spain re-entering recession, and France about to elect a member of the Socialist party, I naturally think this will lead to fewer people wanting to do business in Europe. This should make the Euro less valuable, which means it's cheaper to buy, which means it's cheaper to vacation there. I think about where I'd like to visit. But then I look at the exchange rate numbers. Intrade predicts a 57.6% chance that one country will abandon the Euro by December of 2014. Lesson: plan the Germany trip for the near future and delay other visits to the continent for about five years.