TRAVEL with pat and lew

about euros and dollars

Posted by Lew Weinstein on February 22, 2007

We wire transfered the purchase price for our apartment to the notaire in France from our bank in New York, converting dollars to euros and paying the small fees involved.

During the purchase period, I was a daily follower of the euro/dollar conversion rate. When the euro first arrived, in 2002, it was roughly 1/1 with the dollar, but by July 2005, when we signed our purchase agreement, the ratio was 1.22, which means it takes $1.22 to purchase one euro. Our 170,000 euro purchase price thus equated to $208,000.

Over the summer, the ratio rose to 1.25, but by the fall, it was back down to 1.23 for our final wire transfer. It could have been much worse, or better, and this fluctuation of the euro/dollar conversion rate is a major uncertainty in making a foreign real estate purchase, and also on the potential return when you eventually sell the property.

The rate peaked recently at 1.33. If we sold at that rate for the same euro price we purchased, we would gain about $12,000 when we converted the euros back to dollars. 

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