And the dollar rallies!

If you’ve been in the EU or Japan any time in the last 18 months or so, you’ve probably walked away from a currency exchange or ATM scowling. With the American economy virtually in the dumpster, oil sky high and our trade deficit in the stratosphere (but coming down!), the value of the dollar has been plummeting like it’s out of style.

While few economists can agree on whether this recession will end (or even if it is a recession, proper), what they can observe is the state of the European economies — and apparently they’re not doing well either. While their struggle with the credit crunch and mortgage crises haven’t been as pronounced as the Americans’, the Europeans haven’t been immune to money problems of their own, most notably fuel and food prices.

So while we might be sinking further into the depths of the credit netherworld, at least the Europeans are right behind us — and so is their currency. Against the Euro, the US Dollar has spent the last month running for the trees, gaining about 8% in thirty days with Ben Bernanke cheering from the stands. That means when you slip a hundred dollar bill under the TravelEx exchange in Heathrow you’ll be getting $67 back instead of $62.

It’s not too late to book that Thanksgiving trip to Mallorca.

[image courtesy Yahoo finance]

The Israeli shekel: Giving the euro a run for its money

There’s been a lot of talk about the poor dollar to euro exchange rate, but it might not be the European currency that travelers should be concerned about. In fact, in terms of economic gains against global currencies, it looks like the Israeli shekel is currently the world’s strongest currency.

Since the beginning of 2008, the shekel has made significant gains against most of the world’s major currencies; 15% against the U.S. dollar, as well as just a little more against the British pound and the Canadian dollar, 8% against the Swedish kroner and 24% against the South African rand. And against the euro? The shekel has strengthened by 9% against the European currency. But even with a strong currency, Israel still hopes to attracts flocks of tourists, 2.8 million this year alone.

Discount for “poor” Americans at Venice bar

The dollar might be low, but if you make your way to Venice you can count on a discount from Harry’s Bar, the renowned Venetian watering hole said to be the birthplace of the Bellini and Carpaccio, and where Ernest Hemingway himself downed martinis. Offering a discount to “poor” Americans who are suffering from the weak dollar is representative of a growing concern across Europe that a decrease in US tourists will have an effect on the tourism industry.

At the entrance of Harry’s Bar you now find a sign that says, “Harry’s Bar of Venice, in an effort to make the American victims of subprime loans happier, has decided to give them a special 20 percent discount on all items of the menu during the short term of their recovery.”

How bad is the current state of the US dollar? When the euro was first introduced in 2002, one US dollar was worth 1.10 euro. Today the same dollar gets about .64 euro, which makes the price of even a simple meal of nutella and a baguette expensive.

“Since the start of January, we noticed a drop in (American) customers of between five and 10 percent and now that we are in April its looks really frightening,” said Arrigo Cipriani, owner of Harry’s Bar. Then again, what better solution to economic frustration than a refreshing Bellini?

Dollars hard to sell in Amsterdam

You may be sick of hearing how low the dollar is, but today we have just another example of how badly the American currency is fairing. In Amsterdam, small currency outlets are refusing to buy dollars for euros, making it difficult for tourists to exchange their money.

“Our dollar is worth maybe zero over here,” said Mary Kelly, an American tourist from Indianapolis, Indiana as reported by Reuters. “It’s hard to find a place to exchange. We have to go downtown, to the central station or post office.”

Small currency exchanges are different than banks and other institutions in that they don’t want to be holding a currency that will devalue and be worth less next time they have to sell it. One euro is currently worth $1.58, compared to $1.47 a month ago. If you want to make your travel money last, it’s probably time to find a job in Europe.

New York businesses now accepting euros

What happens when a large American city starts attracting European tourists by the millions? Stores start taking euros just as easily as US dollars. That’s what is currently taking place in New York City where “Euros Accepted” signs are popping up all over the place. Businesses want to make a buck, and apparently it doesn’t matter what kind of currency that buck is in. Those businesses are doing some smart thinking in taking whatever kind of currency the tourists can fork over; tourism in the city brought in $28 billion in 2007.

If you own your own business, things are even better as pointed out by Billy Leroy of Billy’s Antiques and Props, “I am happy to take 200 euros , because what I do is keep them. So when I go back to Paris I don’t have to go through the nightmare of going to an exchange place.” Smart man, I’d be doing the same thing.

Only a few time zones and a 7 hour flight away from big European cities like London and Paris, New York City is pretty much the new European weekend shopping getaway. Make euros the accepted currency and the Big Apple might even be on its way to joining the EU… I don’t think so, but if you are a European, those dollar prices make the city pretty attractive.