Have you been reading the news about the current Euro Dollar currency exchange rate?
With rising inflation also affecting those looking for a mortgage in Europe, what does this mean for American buyers looking for properties in Paris?
We examine the latest reports from both France and the US.
France and the European Central Bank
At 56Paris, we have worked for many years with American buyers, helping them find their dream apartments here.
But at the moment, the financial situation in the two countries is different, especially when it comes to rates of inflation.
The European Central Bank is continuing to raise interest rates throughout summer 2023. Reports state it’s to combat rising rates of inflation across the eurozone.
In June the interest rates went up by a quarter of a point – 0.25%. This is the eighth rise in a row, with a further rise expected this month.
Overall, the reports predict that inflation in Europe will average 5.4% this year, but in 2024, will fall to 3%.
The US and the Federal Reserve
However, across the pond, America is trying a different method.
The US Federal Reserve has paused further rises on interest rates, for the first time in 15 months. This leaves the US central bank’s key rate range at 5% to 5.25%.
It’s temporary though, as experts examine the situation, and further increases are expected. Some reports suggest this could happen two more times this year.
The Federal Reserve’s stance on interest rates will continue to dictate the strength of the dollar through the remainder of 2023.
The aim is to bring inflation in the US down to 2% over time.
How is this affecting the Euro Dollar currency exchange rate?
So how are the two different approaches affecting the Euro Dollar currency exchange rate?
Since the recent announcement by the European Central Bank to raise interest rates, the Euro has shown signs of strength against the Dollar, gaining around three cents.
But the two currencies have fluctuated this year, as shown in this chart by our FX partner. It shows the changing rate from January to June 2023.
Meanwhile, The Bank of England is being more aggressive, raising interest rates to 5%. This is the biggest rate rise in 15 years for the United Kingdom.
The news spurred the British pound to a yearly high against the Euro, and a 14-month-high against the US Dollar.
The best time to buy
These exchange rate fluctuations could be a concern if you’re planning to make a large international transaction – such as purchasing a property.
Of course, you want the Dollar strong, so your money goes further when purchasing in Euros.
An FX expert can advise you and keep you up-to-date on the market trends, to put you in the best position.
For an illustrative example of the difference the exchange rate makes, see this truly exceptional two-bedroom property currently for sale with 56Paris, close to the Eiffel Tower.
Stunning views of the tower inhabit the sunny apartment, set on a tree-lined residential area near both the Seine and the Champ de Mars.
To purchase €3.7million at the beginning of June, you’d pay €3.9million. Today, it will cost around €4.02million.
So there certainly are substantial savings to be had if you lock in a better rate.
56Paris are your property experts
If you want tailored advice about the Euro Dollar currency exchange rate and how it might affect your property transaction, please do get in touch. We can help by putting you in touch with our trusted FX partner.
For any queries about buying real estate in Paris or the local rental market, we are here to help. So don’t hesitate to contact the experts at 56Paris today.
All information given in this blog is current at the time of writing and is a guide only. At 56Paris, we always recommend consulting a legal and/or finance professional for advice on your own personal situation.