Riding the Exchange Rate Roller Coaster (A Thrill Ride)

As our departure date approaches, one can't help but notice the dollar-pound exchange rate making the news. In the last few weeks the pound has hit $2, an exchange rate that hasn't been seen for 18 or perhaps 24 years, or somewhere in that time frame.

I have some experience with past highs and lows, in my long and masochistic relationship with the U.S.-U.K. exchange rate. Every trip I've taken has included agonizing analyses of exchange rate activity and how it affects me. Is it dropping or is it rising? Should I exchange traveler's checks now or later? Should I exchange all my money now or just some of it, in hopes of getting a better rate tomorrow, or next week, or next month? Of course, any benefit I may have obtained was due to pure luck, rather than any true ability to predict exchange rate movement.

(People who have not gone through this experience with the exchange rate are probably currently experiencing similar reactions to the rapidly fluctuating--and rising--price of gas.)

While the exchange rate is always a topic of interest to me, a few instances stand out in my memory. Prior to my first trip to England in 1986, I didn't really pay attention to the exchange rate. But in the winter and spring of 1986, the pound dropped to a serious low, hovering below $1.50 and approaching $1.40 at times. I believe this was a significant drop after some high points in the early eighties. I was in college at the time, spending a semester of my junior year in London, and I especially appreciated the way this stretched my precious dollars. One particularly savvy guy in my group exchanged all his money at $1.40 and put it in a bank acount (saving himself a few dollars when the exchange rate "skyrocketed" back to $1.50). I parlayed the favorable exchange rate into purchases of English china (Minton Consort, to be exact) and Laura Ashley dresses at bargain prices, as well as stays in bed & breakfasts for as little as £8 ($12) per night. (Well, they weren't luxury B&B's.)

I experienced the other end of the exchange rate spectrum in August 1990, when as now, the exchange rate escalated toward the $2 mark (except, unlike now, didn't hit it). During my month in England that summer the rate went from about $1.80 to over $1.90. The £8 B&B's had now increased to £12, and with the exchange rate converted to almost $24 a night (though still pretty cheap, considering). Despite the exchange rate, English china was still a bargain.

A great moment in my personal exchange rate history occurred in early 1993, when the exchange rate suddenly began plummeting (due to some financial crisis in England, no doubt). I remember hearing the news on the car radio--I probably nearly drove off the road in my excitement. As the rate approached $1.50 once again, I planned a March trip to England.

And that exchange rate level remained pretty steady for more than ten glorious years (and about nine trips to England). The writing was on the wall last year, however, during last spring's trip, when the exchange rate rose from the $1.80's when we first arrived into the upper $1.90's by the time we left. (But yet, I managed to return home with two extra suitcases full of purchases!)

My feelings about the exchange rate have always been personal and selfish. How does this affect me (and my purchasing power)? Its effect on the economy of either the U.S. or the U.K. is incidental to me. My general understanding is that a strong dollar means a favorable exchange rate, which is good for American travelers abroad but not so good for American businesses trying to sell goods to other countries. A weak dollar is good for American business but bad bad bad for me!

The reverse of that is probably true for the U.K. Certainly the strong pound is a benefit for English travellers to the U.S. I expect that this summer all of England should be vacationing ("holidaying") in the U.S. I envision them flooding the country with their empty suitcases. Well, that's what I would be doing if I were English (or somehow got paid in English pounds).

A couple of months ago I saw writer Sophie Kinsella (author of the Shopaholic novels) speak at Third Place Books, promoting her new book Shopaholic & Baby (Shopaholic) . She was, incidentally, extremely funny and entertaining. (She strongly hinted that she is acquainted with J.K. Rowling and got some kind of inside information about the new Harry Potter book!) After her presentation I stood in line to get my book signed and say hello personally. I had to wait so long (due to the jabbering idiots in front of me who would not stop talking), that when I finally got to the front of the line, I didn't want to take the time to ask all the questions I wanted to, the primary one being, "Do you have to do a lot of research for your books?" (The Shopaholic books are about a charmingly compulsive shopper who shops a lot in London, then Manhattan for a while, then in London in preparation for her wedding, and in the current book, in preparation for the baby she is expecting. Her shopping gets her into lots of problems which are luckily resolved by the end of each book. Until she shops again in the next one.) But the books are very detailed about shops and so forth, so I wondered if she had to travel to New York and other locations in order to get the background information for the books.

I had a couple of other good questions that I also didn't ask. All I asked her was, "Aren't you just loving the exchange rate?" She said she was, but all she admitted to buying was some earrings from Anthropologie and cookie cutters from Williams Sonoma for her kids (not very Shopaholic of her) (especially as she had obviously spent the afternoon at University Village, a shopper's mecca).

But I, not being a bestselling author in the U.S. and U.K., am a bit more critically affected by an unfavorable exchange rate. Yes, I will be wincing when I see how few pounds I get for my dollars this year. But once you have the pounds in hand, it's best just to spend them as pounds, rather than grudging dollars-converted-to-pounds!

I do plan to make some accommodations to the exchange rate. I think I can really cut back on the shopping this time. It is entirely possible that I have enough stuff (jaws are dropping everywhere). Actually, a lot of the things I used to buy in England are available here, just as cheaply or better (when you consider the exchange rate). (Although "cheap" might not be the best adjective to use.) Portmerion china can even be bought at Costco occasionally (and otherwise at Macy's). Inexpensive cashmere is all over the place. Other clothes in general are a much better buy in the U.S. (Macy's One-Day Sale, anyone?). And as for my favorite thing, antique silver--well, I have cabinets full (currently quite tarnished), and I guess until I actually have a tearoom or antiques shop, I don't need any more sugar tongs, tea strainers, dessert spoons, etc. (Nor toast racks, fruit spoons, and asparagus tongs!) (Not until the exchange rate improves, anyway.)

As for lodging, it is undoubtedly expensive, once you leave the youth hostel world (and I never lived in that world anyway). In my opinion the best buy in lodging is the (self-catering) holiday cottage rental, which seems to cost about half the amount per person as a modestly-priced hotel. In a cottage you can do your own cooking, much more cheaply than eating out, and you can eat what you want. (And groceries don't seem to be too horribly expensive. Last year I particularly remember that lemons and limes were very cheap. And apples too. Other staples seemed comparable to U.S. grocery stores. And of course English grocery stores have some wonderful things you can't even buy in the U.S--like about a dozen different kinds of cream. In fact, I could write a whole page on English cream--and probably will, later on--as well as one about the joys of shopping in an English grocery store!) For travelers who don't want to be quite so self-sufficient, bed and breakfasts provide a hearty morning meal and fall in every price range from budget to luxury. Even the most luxurious B & B's cost a fraction of the rate for a comparably nice hotel.

So a frightful exchange rate need not put too much of a damper on a trip to England. It's not going to spoil mine! I have a National Trust membership for visiting stately homes and gardens (with the high exchange rate, the American version, "Royal Oak" is a better buy), and soaking up the ambience of the English countryside and villages does not cost a thing. The historic streets of London are free for the walking, and one of my main destinations on this trip, walking the country footpaths, costs only time and energy--and perhaps the price of sitting down to tea at the end of the ramble.



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