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  1. #1
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    * How do you solve the Dollar decrease?

    Hi guys,

    How can European webmasters who derive most of their online income from US customers paying in US-Dollars solve the problem with the decrease of the dollar value in comparison to the Euro currency?

    These webmasters are living in countries who have opted the Euro as their currency. They lose lots of money because of the weak dollar and they cannot increase their prices for US-customers constantly just because the dollar loses value every month.

    Haary

  2. #2
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    You cannot increase the price even when US dollars depreciate against Euro dollars if you really want to keep your existing US customers.

    Maybe you can increase your new US pricing, but maintain your old pricing for your existing customers, your existing customers will appreciate it.

    Or change your pricing to Euro dollars now, and let your existing US customers pay you in old US pricing, provided if your shopping cart and credit card processor can accept US dollars and Euro dollars.

    Just my thought!
    Last edited by cavalry; 04-20-2005 at 12:07 PM.

  3. #3
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    Just have to bite the bullet. Everything goes in cycles, and the day will come when the USD is strong and we will reap the rewards.

  4. #4
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    I'm sure that the European customers who pay in US$ are very happy with the current situation

    But I agree with you that most likely the US$/Euro currency rate will change again sooner or later.

    Yangxi

  5. #5
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    One other method that I use is that I print my prices in Euro and charge all my clients in Euro only. There is a live-conversion displayed at my site for several other currencies including USD, but a * says that this is an indicator only and that all transactions are charged in Euro and that the exchange-rate depends on their bank / PayPal at the day they purchase. This way clients can chose upfront if this acceptable for them or not and is pretty fair for both sides.

  6. #6
    Originally posted by yangxi
    I'm sure that the European customers who pay in US$ are very happy with the current situation

    But I agree with you that most likely the US$/Euro currency rate will change again sooner or later.

    Yangxi
    How do you figure that? The problem is that European sellers are competing with American sellers, which in turn deal in a free market.

    If European sellers increase their price there is a chance they will price themselves out of the market if American sellers don't also increase their prices. The whole idea is to remain competitive.

    This is a little OT, but there is going to be a bigger problem if Asia, Middle East, and ??? adopt the $Euro instead of the current $Amer. You think it's a problem now, just wait.

  7. #7
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    This is a little OT, but there is going to be a bigger problem if Asia, Middle East, and ??? adopt the $Euro instead of the current $Amer. You think it's a problem now, just wait.
    I don't think they will adopt the EUR but else it could be a nightmare.

  8. #8
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    The Euro is, as the name says, a currency that only countries in Europe AND in the European Union can adopt after they have been accepted to join the European Union. This is to keep the currency stable and strong.

  9. #9
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    Originally posted by Lorenz
    The Euro is, as the name says, a currency that only countries in Europe AND in the European Union can adopt after they have been accepted to join the European Union. This is to keep the currency stable and strong.
    I think the current situation does not show a strong and stable EURO, but a weak USD. The USD is also much weaker against the Can$ than 2 years ago, but the exchange rate EURO/Can$ hasn't changed that much.

    In my opinion it's only a matter of time that the EURO gets weaker against the USD again. Just look at the financial situation of some big countries in the EU and the weak European economy compared to the USA and Asia.

    But only time will tell..........

  10. #10
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    In fact dollars are becoming extinguished in national trasuries... Euro is taking it's place - it's the most stabile currency right now. I visited some foreign exchange prognosis sites (forex) - and their middle term prognosis is not too good for the USD. So I would be very hesitant to base my business in USD since it does not give you a planning path.

  11. #11
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    Originally posted by yangxi
    I think the current situation does not show a strong and stable EURO, but a weak USD. The USD is also much weaker against the Can$ than 2 years ago, but the exchange rate EURO/Can$ hasn't changed that much.

    In my opinion it's only a matter of time that the EURO gets weaker against the USD again. Just look at the financial situation of some big countries in the EU and the weak European economy compared to the USA and Asia.

    But only time will tell..........
    The Euro has indeed lost some of its strength when the EU stability contract was a bit unfrozen, so that countries can make more debt than previously. The exchange rate dropped immedititaly from 1,36 to 1,27 but now, 2 weeks later, we are back at 1,31 again and increasing (Euro getting more stable like before).

    Though you are right that the CAD is pretty "stable" since over a year now to the Euro. Though, with 1,61 CAD for 1 Euro it is not really good at all summarized as well.

  12. #12
    Originally posted by trinitron
    I don't think they will adopt the EUR but else it could be a nightmare.
    There was a little noticed news event in Nov. of 2001. Sadam was switching from an $US based economy to one of Eurodollars. I don't want to start a conspiracy, but the timing is interesting.

  13. #13
    Originally posted by yangxi
    In my opinion it's only a matter of time that the EURO gets weaker against the USD again. Just look at the financial situation of some big countries in the EU and the weak European economy compared to the USA and Asia.

    But only time will tell..........
    Are you aware that China has openly talked about switching from $US to $Euro? Other countries are also discussing the possiblity.

    There was also an interesting news item last week. The US is preventing Amer. citizens from transferring money overseas. Basically, they are preventing US citizens from opening overseas bank accounts.

    .

  14. #14
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    Originally posted by Storyman
    Are you aware that China has openly talked about switching from $US to $Euro? Other countries are also discussing the possiblity.

    There was also an interesting news item last week. The US is preventing Amer. citizens from transferring money overseas. Basically, they are preventing US citizens from opening overseas bank accounts.

    .
    You are misinterpreting this. These both countries (Iraq and China) have their treasury in USD as a backup. But since the USD is being so weak they are considering selling the USD and convert it to Euro before it falls more. This has, however, nothing to do with the official currency that is used in China and the Iraq. Even you can buy huge amounts of different currency. This is normal currency trading as it happens daily - just that they do it with a a lot higher amount and that such a sale can of course influence the value of the currency itself if it is a really massive amount.

  15. #15
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    Here is a article which explains a bit better what I said: http://www.dailyfx.com/index.php?opt...=293&Itemid=46

  16. #16
    Originally posted by Lorenz
    This has, however, nothing to do with the official currency that is used in China and the Iraq. Even you can buy huge amounts of different currency.
    We are talking about the same thing. I never meant to refer to the currency that exchanges hands within a country, but where their investment dollar goes. When Iraq announced that it was switching from $US to $Euro it was for exactly as outlined in your posting. The effect is that it would skyrocket the price of crude oil way beyond what America is currently paying--because $US would first have to be exchanged for $Euro.

    Another factor that impinges itself on the discussion is the WTO. In the coming years it will have a greater impact on the US than it has in the past. For example, unless the US Congress changes things vitamins will not be sold as they are now. To purchase many of the vitamins that are currently available will require a physcian's prescription. If you doubt this Google "WTO vitamins."

    I do want to correct one thing that I've said early. The US has not stopped money from being transferred overseas, but they do intend to track every dollar that does leave the country. The part about not allowing US citizens from opening foreign bank accounts is not currently being prevented.

  17. #17
    Originally posted by Lorenz
    Here is a article which explains a bit better what I said: http://www.dailyfx.com/index.php?opt...=293&Itemid=46
    Great article. Thanks for posting. I hope everyone reads it.

    BTW When talking about the $US do you realize that it is controlled by a private corporation? The Federal Reserve is a private corp with the chairman of the board appointed by the president of the US. Again, if you doubt this just Google "Federal Reserve" and you will discover that the Federal Reserve was established as a private corp. in 1913. The interest rates are not set by the US Government, but by a group of banks.

  18. #18
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    Storyman, sorry, I misunderstood you then, but possibly most of the readers were thinking what I outlined (that we are speaking of the currency that is used in these countries).

    I knew that it is controlled by a private corporation, though the banks set the interest rate, better said the US Federal Bank (not sure of the exact name). Thats the same here in Europe, just that the European Central Bank does it. About money leaving the country, its the same here as well (even within European countries). All banktransactions (in one transaction) above 12500 that leave Germany need to be announced to the German goverment.

  19. #19
    Lorenz,

    In US if you ask if the Federal Reserve is a federal agency or private corp., 95% of the people will tell you that it is a federal agency. There really is a lack of national and global economics here in the US.

    My point about bringing up the switch of China increasing their investment in $Euro is that a change like that has world wide impact. Worse, if the mid-east does the same--that's why I mentioned about Iraq making the change in Nov. 2001.

  20. #20
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    Please focus on the actual theme of this thread. This thread is not that much about the forecast of the value of the US-dollar towards the Euro, but it is about the income that webmasters get from selling their online services and goods in US-dollar.

    One example:

    When in April 2002
    $ 1 was 1,10
    it was not a problem for European webmasters because they made a currency profit of 0,10 per US-dollar. They could charge their clients in US-dollars because most of their clients were from USA.

    In April 2005
    $ 1 is 0,75.
    This is a big problem for European webmasters because they make a currency loss of 0,25 per US-$.

    In fact, some of them if not most of them have a $-bank account where they put the dollars that they got from their US-clients. They had the hope that as soon as the value of the US-dollar increases towards the Euro they could change their money from their bank into Euro. But their hopes have been turned into false hopes because the US-dollars has continued losing its value and it still continues to lose its value. Experts forecast that at the end of 2005 / in the beginning of the year 2006 $ 1 would cost 0,50.
    That means European webmasters would charge their US-customers half of the price than in 2002. The inflation factor is not even included.

    If European webmasters increase their prices for US-clients or if they force them to pay in Euro, then they would be in disadvantage towards their US-competitors.

    The question now is whether European webmasters who have an Internet business making money from its online services should move to a country where everything is paid in US-dollar, like for example USA or Caribbean.

    Or is there a better solution for this misery?

    Today, Iran announced that Iran would want to sell its oil only for Euros and not for US-dollars because the US-dollar continues to lose its value.
    If other Arabic countries follow Iran, the US-dollar would lose a lot of value over night.

    Haary

    P.S.: Please excuse my bad English.

  21. #21
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    Originally posted by Haary
    Please focus on the actual theme of this thread. This thread is not that much about the forecast of the value of the US-dollar towards the Euro, but it is about the income that webmasters get from selling their online services and goods in US-dollar.
    The forecast of the future value of the USD against the EURO is most important to determine the necessary steps that must be taken by the "EURO based" online companies. Whether to move the business to a different country, whether to do some currency hedging or just to change nothing as the EURO might get weaker against the USD again.

    P.S.: Please excuse my bad English.
    I wish my English would be as good as yours. In my opinion your English is excellent

    Yangxi

  22. #22
    Originally posted by Haary
    If European webmasters increase their prices for US-clients or if they force them to pay in Euro, then they would be in disadvantage towards their US-competitors.
    The topic of this thread can be restated as: "How does a seller living in a country using $Euro remain competitive with those sellers who live in a country who use $US while the value of the $US remains weak against the $Euro?"

    The problem isn't going to go away.

  23. #23
    he topic of this thread can be restated as: "How does a seller living in a country using $Euro remain competitive with those sellers who live in a country who use $US while the value of the $US remains weak against the $Euro?"
    I'm not an economist or an accountant, but wouldn't it also be fair to say that the weaker US Dollar makes US goods and services cheaper for the Euro-Host than before? So, if they are using US based servers and paying dollars for them, the costs of operation have dropped.

    At $ 1 was 1,10, $1,000/month in fixed operating costs = 1,100.

    At $ 1 is 0,75, $1,000/month in fixed operating costs = 750.

    The net converted amount earned as dollars and taken home as Euros might suffer a conversion penalty, but the income/expenses contained only in the U.S. would not suffer since it's an equal playing field for income/expense.

    This is just off the top of my head so I could be completely wrong.

    Steve
    This is not a signature.

  24. #24
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    Good thoughts, bravelion

    The European hosting companies could move their reseller accounts and/or dedicated server to datacenters in the USA.

    It could also be a good idea to have some reseller accounts/dedicated servers in Europe and some in the USA. This way, changes in the currency exchange rates won't have such a big effect on their business.

    Yangxi

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