Euro:Dollar Exchange Rate Causes Woe For Expats -
Quick Quote
  • (inc. country & area code)
  • Please note this service is only available during London office hours. If your call is urgent we will endeavour to get back to you at the earliest possible opportunity.
  • This field is for validation purposes and should be left unchanged.

Call us today: +44 (0) 20 3551 6634

Euro:Dollar Exchange Rate Causes Woe For Expats

One of the benefits of an expatriate lifestyle is the so-called principle of “geo-arbitrage” – simply that some currencies are worth more than others, and that as a result products and services cost different amounts in different countries. This is one reason why so many retirees opt to retire to “cheaper” countries and why areas like the Philippines and Ecuador have long been popular tourist destinations.

Quite simply, visitors to these countries from Western, first-world nations are able to leverage their home currency and so multiply their money. This allows many expats and tourists to spend extensive periods of time abroad, enjoying a life they simply couldn’t afford back home.

This is all well and good when the currency differences are in your favour; but what happens when you’re on the losing side? That’s exactly what a group of expats in the US are starting to discover, as their salaries dry up in the wake of changing currency rates.

Since mid-2014 the Euro has seen a significant slump against the dollar; a pattern that continues even to this day. Last year, the rate sat at around 1.4 Dollars to every Euro. Today that figure is closer to 1.1, essentially reducing the value of the Euro against the Dollar by around 20%. This is clearly not an insignificant sum.

European expats living and working in the US can find their remuneration in one of two formats; they’re typically either paid in native US Dollars or in their home currency of Euros. Not too many years ago, with the Euro flying high, many expats opted to be paid in their native currency, and so enjoyed a higher buying power while living in the States.

Now, though, the market has moved in the other direction. Expats being paid in Euros are finding that their salaries have essentially been cut by 20% in the last year, causing considerable financial discomfort. In some cases, expats have been lucky enough to land pay raises, or renegotiate their contracts to receive payment in dollars. In cases where this hasn’t been possible, however, many expats are starting to feel the squeeze.

It becoming ever more commonplace for expats living in the States yet being paid in Euros to either have to downsize their lifestyle, or take on extra work to make up the shortfall. Numerous expats right now are considering taking second jobs, or requesting overtime, in order to keep up with the lifestyle they have become accustomed to.

Quite how much further the Euro will fall remains to be seen. There has been considerable consternation in the currency markets recently with the way Greece is behaving. Now threatening to exit the Euro altogether, default on loan repayments and go their own way, there is much upheaval in Europe. Worse, it seems that EU members like Germany and the UK are growing tired of Greece’s “games”, a situation which could yet worsen the value of the Euro still further. Only time will tell if this unfortunate currency situation will ease.

Latest Expat News
South AmericaNorth AmericaAfricaAustralia & New ZealandAsiaEurope