This article was originally posted on RealClearWorld.
My wife and I travel to Europe about every eight months. (Photographs? I thought you’d never ask!) In order to minimize costs, we closely monitor exchange rates, preferring to book trips when the rate is favorable.
Currently, 1 U.S. dollar purchases 0.89 euros. The exchange rate hasn’t been this good for American travelers since September 2003. (See chart.)
It’s raining euros, hallelujah! (Credit: European Central Bank)
The good news (for Americans travelers and European exporters, but not necessarily anybody else) is that the euro is expected to keep falling. In fact, The Economist predicts that the U.S. dollar may reach parity with the euro sometime this year. That hasn’t happened since November 2002.
Why is the euro falling? Mostly, it is due to self-inflicted political and economic turmoil in the European Union. As I wrote in The National Interest at the beginning of the year, three big elections may determine the fate of the European Union.
The first, in Greece, just happened. A victory by the radical left, anti-austerity party Syriza — by far, the worst possible outcome — has occurred. The second election will be in the United Kingdom in May. If David Cameron is re-elected, he has promised to hold an “in-or-out” referendum on the European Union by 2017. Currently, Brits want out. Third, Poland will vote for a new parliament in October, and a mildly euroskeptic party may win. Another writer noted that Spain and Portugal are also scheduled to hold elections, and neither country is fond of austerity. And, of course, the Russian invasion of eastern Ukraine hasn’t helped things, either.
Such turbulence has taken its toll on the euro. But a cheap euro isn’t the only thing in a traveler’s favor.
Rock-bottom oil prices have meant lower jet fuel prices, which fell by 50% in 2014. Though that hasn’t translated into cheaper airfare, it does mean that airlines can invest in new planes and services, according to CNN. Transatlantic flights are very long, and small comforts can make the ride more tolerable.
Bottom line: If you have been planning a trip to Europe, 2015 is definitely the year to go. If you haven’t been planning a trip to Europe… well, maybe you should plan a trip to Europe.
(Chart: European Central Bank)