For Americans abroad, no dollar news is good news

Written by admin on September 3, 2008 – 2:58 pm -

The dollar is stronger than it’s been for a long time, and some American travelers and expatriates are breathing a sigh of relief, hoping this is only the beginning. Many of them are tired of living on a diet of bread and pasta.

Maybe you don’t think currency markets are exciting, but lots of people monitor the exchange rate. They cheer when the dollar rises — and cry when it falls.

The U.S. dollar has risen to $1.45.16 to the euro, the highest since Feb. 14, 2008.

According to Meg Browne, vice president of foreign-exchange research at Brown Brothers Harriman & Co., the dollar is on an uptrend. “Growth and monetary-policy differentials are beginning to shift in favor of the U.S. dollar,” she said in a recent interview.

Two analysts — Standard Chartered Plc and BNP Paribas SA — have reportedly raised their forecasts for the dollar. London-based Standard predicts the dollar will rise to $1.44 per euro by year-end and $1.36 by the end of the first quarter of 2009, compared with previous forecasts of $1.49 and $1.42.

The decline in oil prices, plus Europe’s weakened economy, is contributing to the dollar’s rise. But neither Americans, nor people in the hospitality industry who depend on US tourists, are resting easy. The dollar has a long way to go until people feel it’s a good travel buy. And that’s not factoring in the increased airfare costs and airlines’ decreased service.

It’s too soon to forecast how soon Americans will return to Europe but the rise in the dollar can’t hurt. Part of it is a matter of psychology.

But the news is something. Let’s hope it continues.

Karen Fawcett is president of Bonjour Paris

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