Have you checked out the euro/USD exchange rate lately? The euro is tanking and as I’m writing this on July 7, 2022, 1 euro = USD 1.02. No, that’s not a typo for $1.20. It’s $1.02. Really. It might even reach parity with the USD.
This has been a long time coming. The fall of the euro seems to be upon us and has just hit a 20-year low. If you’re like me and live abroad with savings in the US or get paid in USD, you’ve popped some bottles and smile ear to ear every time you hit up the ATM. And rightfully so, the euro is at an all-time low and after getting killed on the exchange rate when transferring savings to buy our house, car and more over the years, I think my little happy dance is warranted.
The Euro is tanking
All kinds of things make an American in France extremely happy. I speak for myself, but care packages, seeing that an American movie is offered in VO at the local movie theater, discovering a new coffee shop, the supermarket changing their hours to open on Sunday mornings and more all put a little pep in my step.
It’s the little things, right?
And when the euro is down? HOLY HECK, that is the best news ever. Over the last couple of years, anything below 1 euro = USD 1.30 would leave me feeling good, but with the current exchange rate, I don’t even think there’s a word to describe my happiness. Ecstatic comes pretty close, though.
When you’re paid in dollars and your savings is in dollars, the fact that the euro is down makes going to the ATM a lot less painful than it has been in years. When you buy something on your American credit card in Europe and see the exchange rate, you no longer want to cover your eyes and run.
When a weak euro means your friends and family are more likely to visit you abroad, that’s the ultimate reward.
How can the weak euro benefit you?
What does this mean for the economy? Time will tell, but for now, I’m looking at the positives. The euro is down so if you’re bringing dollars to Europe, they will go so much further these days. If you’re paid in dollars, now might be the time to take that European vacation you’ve always dreamed of. Maybe it’s time to buy that property in Europe. Or exchange dollars into euros for a future trip or purchase. Or treat yourself to that Louis Vuitton bag you’ve worked so hard for.
Seriously — let’s take the Louis Vuitton Speedy 30 for example. In the US, the bag will cost you $1.550. On the French Louis Vuitton site, the Speedy 30 is 1,150 euros which at today’s exchange rate is about $1,168, over $300 cheaper than the US price. Not bad, eh? Then be sure to get your VAT refund using Wevat which I talk about in this post to save even more.
I’m not advocating that you spend money on things you don’t need, but if you’ve been meaning to treat yourself, now may be the time.
If your trip isn’t until later this year and you have reservations that are going to be charged to you in euros, prepay them now to take advantage of the strong dollar. Apartment rental, a case of wine from that winery you love, tours, gift certificates to your favorite restaurant, luxury items, etc. It helps if you have a friend in France who you can ship things to until you get there.
If you’re already in Europe, support local businesses and maybe treat yourself to something special. Why not? And if you’re thinking of visiting, now is most definitely the time!
PRO TIP: No matter what the exchange rate is, the best deals for tourists are often on goods and services that are aimed at domestic consumption, so shop like the French do. Think privately owned hotels, wineries, local goods and restaurants over foreign chains, etc. The worst deals are the ones that are geared toward foreign visitors, so think international hotels who are used to fluctuating exchange rates and adjust their prices to be in tune with the dollar and not the euro.
ANOTHER PRO TIP: Do NOT exchange money at your home bank before coming to Europe and don’t go anywhere near airport money exchange booths if you want the best rate. The rates are inflated and are not in your favor. You can lose as much as 8% and that adds up! I wrote all about currency in France here with more money tips. For GREAT currency exchange rates, I highly recommend using Wise (formerly Transferwise).
Do you have any plans to take advantage of the exchange rate right now since the euro is down? Will the euro become a weak currency indefinitely? Who knows, but for right now, I’m fully enjoying myself.