Watching the rates

It's time for me to transfer some U.S. dollars over to France so that we'll have money to live on for the next six months. Doing the transfer is not complicated, but it is a lot of trouble. I have to set up a transfer with a company that specializes in currency conversions and agree on the exchange rate. Then I have to have my bank in the U.S. wire the dollars to the currency exchange company, which is in London. The London office wires the money as euros on to my bank here in Saint-Aignan (Montrichard, actually) at the agreed-upon rate.

It's important to me to get the best rate I can get for the conversion from U.S. dollars to euros. As a retired person, I'm in a position where every dollar — or euro — counts. And the dollar is weaker than we'd like it to be. For the past few days, I've been watching the exchange rate evolve in favor of the American currency. In other words, just this week the U.S. dollar has gone from being worth 0.74 to 0.77 centimes d'euro (eurocents). In other words, the euro has dropped from $1.34 U.S. to $1.30.

As a hypothetical example, let's say you are having $25,000 U.S. dollars transferred to Europe. If you change the money at $1 = 0.74 €, you end up getting 18,500 euros. If you change the money at a rate of $1 = 0.77 €, you get 19,250 euros. Those 750 extra euros represent a good portion of our everyday expenses for a whole month (groceries, fuel for the car, bread, wine, satellite TV, Internet, etc.). Or a six-month supply of heating oil. Or several years' worth of firewood. A round-trip plane ticket to the U.S. Or, for example, I could buy a nice computer with the extra money. We could go spend a week in a rental apartment in a nice neighborhood in Paris. Or... well, I can dream, can't I?

Remember, the above example is purely hypothetical. Nonetheless, when we bought our house in 2003, that sum, $25,000 U.S., was worth more than 23,000 euros — nearly 4,000 € more than it is worth today. In 2002, it was worth more that 28,000 euros! And a couple of years ago, at the U.S. dollar's low point, it was worth less than 16,000 €. All the while, prices in France, as nearly everywhere, just keep going up. Wild and unpredictable currency fluctuations have been a hard reality of the American (and British) expatriate's life for the past eight years.

When I applied for my future U.S. Social Security benefits the other day, the man I talked to at the American embassy in Paris told me that I can have the monthly payment sent directly to my bank here in France in euros. There is no fee involved for the conversion of the dollars into euros. The only unknown factor is the exchange rate. We won't know from one month to the next how much money will come through when it gets to the bank in euros.

I think I'm going to try it. Having the money paid into a U.S. bank account and then processing the conversion into euros once or twice a year is a big hassle. Something in my head says I'd have more control over the process if I continued doing it that way, however. I'm sure that's just an illusion. There's no need to be a control freak. Exchange rates are like the weather. You can worry about them, and you can talk about them, but really, you can't predict or change them. All you can do is watch... and adapt.