Euro J

What happens when the exchange rate of the Dollar to the Euro is 2 Dollars = 1 Euro?

At the Euro's inception in 1999, it's value was equal to the Dollar. Now is it worth more than one and a half times more than the dollar. What happens if it is worth twice as much as a Dollar in the within the next 10 years?

Public Comments

1. We will find out how well Americans can build a Mercedes. The dollar can drop only so much before it will attract investments. EADS is already building airplanes for the air force in America, not Europe.
2. Yes, we will start seeing stronger capital inflows, though there may be some petering out of US financial instruments in the financial markets. That's simply because the expected rate of return on financial instruments has to rise that much more to compensate for depreciation when translating currencies. Bear in mind that the Euro didn't just appear, but succeeded an already-accepted but oft-maligned European Currency Unit. As it has come to be more widely accepted by more nations (as the EU has grown), it should be expected to gain value. However, this may be tempered by inflationary pressures - the Euro's estimated inflation rate is above 3%. If the Dollar inflation remains around 4%, then we should continue to see the dollar depreciate; if however the economic malaise hampers US productivity more, then it is possible that the exchange rate could solidify.
3. Then lots of Europeans come here to vacation.