“The median of 70 forecasts in a Bloomberg survey puts the euro at $1.29 by year-end. While that’s down from a prediction of $1.32 as recently as Aug. 15, it still implies a gain of about 1 percent by the end of December. The surveys predict a decline in the currency to $1.26 by the middle of 2015.”
UBS is predicting it will fall to $1.20 next year and Morgan Stanley’s head of European foreign exchange strategy sees $1.15, the story says.
For reference, it traded over $1.39 at several points earlier this year and traded over $1.45 in 2009 and 2011.
Heaven knows, we’re due for some good news on pricing.
I have a container payment due that was figured at a 1.36 Euro - and just this morning when I was going to transfer funds, got a 1.26 exchange rate on the transfer.
I don’t think that’s really true over time. The 82 Bordeauxs came in cheap because it was 10 francs to the dollar in 1983-84, while the 85s were very expensive here because they came in at FF5=$1.
The 99 and 01 vintages in Europe came in at attractive prices because the euro was low in that period – as low as 86 cents in 2000 and still around $1 in late 2002. By the end of 2003 it has shot up to $1.25, which was a big reason why 2002 Burgundies were so much more than the 01s.
There has been a long-term trend toward rising prices in euros, but the exchange rate is a major factor in US prices. Most people here don’t think about this factor.
I feel your pain. My last trip to Europe was in June 2011 when the euro was at $1.45. Not, that hurt! I also managed to be in London in 2008 when the pound was at $2 and it cost $8 for a round trip on the Tube in Zone 2. That was absurd.
My company bank account is through a Credit Union, not a bank, and this is what they quoted, I wasn’t arguing - I knew it had dropped below 1.30, but was shocked at the price -
Well, a lot of them have taken lower margins and had their producers keep prices stable in order to weather this hell. I imagine there will be some relief, probably not for the wines you care about the most. Baudry is allocated now, for f*cks sake.
For a bit of perspective I represented a Swiss company in the early 1980’s when the Swiss Franc was approximately 2.80 to the dollar, the Pound 1.05 and the DMark 3.35-3.40. When the Euro was introduced the official exchanged rate was US $1.16 to the Euro. After a couple of years it actually dipped down into the mid '80’s. (Solaia @ E90 was equal to US $76 or 77, Dal Forno Valpolicella was E 35 (or about US $30., etc.) At that point at time I would bring back 10-12 bottles in carry ons and checked bags on each trip to Italy/Germany/France/Spain/Brussels-everyone greatly benefitting from the exchange rate.
At the other extreme I was in Hamburg when the Euro topped out at US $1.61. This is almost literally double what it had traded for 8 or 9 years earlier. At that price I bought virtually nothing.
I made more 65 trips to Europe on business during a 10-12 year period for business; my trips including 7 to 10 driving trips through a half dozen countries. I reacted to the trips much in the way that I reacted to the exchange rate, i.e. if the dollar was particularly weak I bought little, ate middle of the rode and did very little shopping. When it was exceptionately strong (under par value) I bought Zegna and Brioni, brought back wine and dined well, all as a reward for my free time and the many nights I was away from home.
All of this strikes me as a surprising conversation: US $1.28 is expensive for the Euro-that is not a bargain. You have to go under fair value which is the US 1.16 for it to be advantageous.
As for a bargain for wine, for me, it would have to go under 1-1 before I would consider most French wine again.
Since we’re discussing economics, the time value of money needs to be factored in. An exchange rate in the mid-high 120’s would be 5 - 10% lower in (picking a date at random) 2002 dollars.
Pretty much my observation from traveling back and forth for the last 30 years. Let’s get back to parity before we get too excited. Buying 2000 Bdx in the US, especially at futures, was like a buyers dream come true.
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