The Euro is riding high as an international reserve currency – so says the headline of a recent report issued by Deutsche Bank Research. Economist Werner Becker from the Bank notes “The euro’s share of global foreign exchange reserves rose from 18% at the start of 1999 to around 25% by the end of 2003. Becker cites four factors why DB expect the euro share of global foreign exchange reserves to rise to 30-40% by 2010”. The move away by some countries from a dollar peg to a basket of currencies with the Euro at its core has deep implications for the dollar with continued weakness for the greenback forecast all the way till 2010.
Its effect on inbound tourism is already being felt in gateway cities in Florida and in NYC. According to US government data tourism in the U.S. was already booming at the end of 2006, growing at an annualized rate of 8.0 percent in the fourth quarter, the fastest pace since the first quarter of 2005. That pace has continued into the first quarter of this year. While that is excellent news for hoteliers in these markets, the prospects for American tourists going to the eurozone and the the UK and looking for bargains looks very dim.