a380900
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Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 4:15 am

Pretty much what the topic says. Why is Airbus pricing its planes in dollars? By pricing them in Euros, they would suffer less from exchange rate shift and they could get dollar components for peanuts.
 
zvezda
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 4:23 am

Because deals are worked out over long periods of time and most customers prefer to account in dollars. The customers don't want a deal that changes minute-by-minute as exchange rates fluctuate.
 
pelican
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 4:53 am

The customers don't want a deal that changes minute-by-minute as exchange rates fluctuate.

This would only apply to US-customers (and from states with a fixed exchange rate).

pelican
 
f.pier
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 4:55 am

I don't agree, because exchange rates change and currencies go up and down. Airbus must pay almost everything in Euro, so I think they should offer everything in Euro.

And then, I think it's stupid that European Airlines change money into dollars to pay an European supplier.
 
zvezda
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 5:09 am

While it would be more convenient for airlines in the Eurozone and countries fixed to the Euro (included Lithuania, my home, for example), virtually every firm in the world outside Europe prefers to do international trading in US dollars. Europeans have been trying to buy petroleum from Russia and from the Middle East in Euro, but all the sellers say "Pay in dollars or no oil."

For some reason, much of the world seems to think of Europe as an island off the coast of England. It's still easier to spend GBP than EUR in much of the world. That may change as the Eurozone expands and people around the world get used to Euro.
 
a380900
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 5:37 am

It's not over. I'm sure some country will start selling oil in Euro in the near future. I'd rather have my money invested in a currency with a central Bank in Frankfurt than in a currency whose underlyings depend on Mr Bush's decisions.
 
trex8
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 5:46 am

>I'd rather have my money invested in a currency with a central Bank in Frankfurt than in a currency whose underlyings depend on Mr Bush's decisions.

the real issue is the US trade deficit and the deficit spending by especially the present administration.
aerospace is a global industry, the A380 has almost half its suppliers in the US and quite likely over half the 7E7 will be built outside the US, while the Euro is doing great right now, and may continue to do so in the short term, the US$ has a longer track record of being a more reliable currency, though that may be changing!
 
Ken777
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 6:06 am

A lot of the world has already moved their money out of the dollar, which is why it is down.

As for major capital expenditures like aircraft the manufacturer had better have hedged against the dollar decline or they are going to have some hits on their profits. I think Airbus is pretty well covered up to about $1.35 (as I remember A discussing the issue) but if the Euro hits, say $1.50, then A is going to have a problem with delivering planes a lot cheaper than they planned. If this is a long term situation they the 380 may be taking a significant hit on launch orders. Playing the dollar game has turned out to be as complicated as the engineering side of aircraft development.
 
srbmod
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 6:32 am

The reason is probably because a large number of the aircraft leasing and finance companies are US-based or are the overseas division or branch of an American company. The prices are quoted in US $ so that these companies don't have to worry about the fluctuation in the dollar. Much like the British Pound used to be, the US Dollar is the currency of choice for many people in countries where the local currency is very weak by comparision. The Euro is making a bid for this role for the future due to the decline of the Dollar's value against pretty much every single major currency in the world.
 
AirbusCanada
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 7:13 am

100% of airbus’ revenues are in US Dollars.
50% of Airbus’ expenses are in US Dollars. And the Other
50% of Airbus’ expenses are in EURO.

That does not mean every airline pays US $ for their aircraft purchase.
For example Emirate’s $26 billion dollar mega order will be paid off in twelve different currencies to create a cushion against volatile currency rates. For example, a portion of that order is financed by British banks and Emirates will pay them in Pounds and the banks will pay Airbus in US dollars.
.
 
atmx2000
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 7:13 am

On the contrary, the dollar won't go down too much more because a lot of countries either depend on US customers for sales or compete with US exporters. If the dollar goes down further, US manufacturers and workers will become frighteningly competitive in international markets and will regain marketshare in the domestic market that they lost due to the high dollar. The increased corporate profits and increased income tax base from increasing employment will lead to a reduction of budget deficit. The increased economic activity has already reduced the projected deficit for 2004 from over $500 billion to closer to $400 billion. US exporters are the most competive they have been since 1997 when the dollar started its ascent as a result of overseas investors searching for a safe haven after the Asian financial crisis. The dollar's value is on a trade weighted basis roughly where it was during the last year of Clinton's first term.

Anyway, as long as Europe pursues anti consumption policies via high Eurozone sales/VAT taxes and high income taxes, Europe will never be the customer of choice and countries that are trying to achieve low unemployment rates via exports won't have a reason to revalue their currencies in relation to the dollar. Investors may be willing to put their money in Euros in the short term, but since interest rates aren't that high the only way they will make money is due to an appreciation in the Euro's value. Unfortunately for Europe, European companies themselves will become less competitive with the rise of Euro so their stocks will be less attractive in the long run. And because of restrictive employment policies and high costs of employment in Europe, European companies and workers won't adapt well. It takes a strong, dynamic economy to weather an extremely strong currency. The US did fairly well inspite of the overvaluation of the dollar and assosciated bubble from 1998-2002. Japan didn't tolerate the high yen and associated bubble very well and suffered a decade long hang over from its ill effects. Europe will fare worse unless they change their policies.
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Buyantukhaa
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 11:03 am

AirbusCanada has given the solution, which in a simplified form could be that a plane costs e.g. $100m + €100m or something similar. While planes might be LISTED in dollars, the actual payment deal could have any shape, as mentioned above. And as any plane purchase always involves a good deal of negotiations, I'm sure "more-than-one-currency" solutions can be part of those negotiations.
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ERJ170
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 11:12 am

Perhaps here is another aspect...

Though the current US administration is hurdling the country into a vast pit of hell, the longest his term can be is 8 years.. which is actually a short time. Then someone new comes in .. so the administartion has a very short term effect on the value of the dollar.

Also, the US Dollar is an industry standard. The Euro is the new kid on the block. It takes time. But the US Dollar will be the standard for the most part for many many years to come. The US Dollar is backed by some hard evidence (ie, Fort Knox and others) and the dollar will not devalue enough to cause a serious economic problem.
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N79969
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 11:20 am

Actually I think the dollar still has room to fall even further. Just this spring China and Japan spent an enormous amount of money to prop up the dollar leaving them with a combined $900 billion in U.S. treasuries. (Which are now declining in value) Foreign central banks are not going to pour money into a declining value asset forever. Investors have all but quit.

This would be a real bad time for Airbus to start pricing in Euros.
 
warren747sp
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 11:27 am

Airbus should price their planes in Euros and see how long they can maintain their market share.
The cheap dollar is terrific for US export and great weapon to use against unfair trading practices.
W
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AirbusCanada
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 12:05 pm

Airbus should price their planes in Euros and see how long they can maintain their market share.
The cheap dollar is terrific for US export and great weapon to use against unfair trading practices.
W


Dont' understand what you meant?
if they price their plane in Euro now, it will actually generate more profit for them at least in the short term as 50% of their expenses are in US dollar.
 
ukair
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 12:16 pm

What about paying for a new aircraft in 'cash' .. that would be funny.
 
atmx2000
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 12:59 pm

Though the current US administration is hurdling the country into a vast pit of hell, the longest his term can be is 8 years.. which is actually a short time. Then someone new comes in .. so the administartion has a very short term effect on the value of the dollar.
Have you ever considered that an overly high currency can be a bad thing, and that the current policies are a good thing? A high currency is a good thing for consumers and retailers (and their employees) and perhaps for some users of imported materials, but it is a bad thing for exporters of raw materials and manufacturers and their employees. Why else would Asian countries try and keep their currencies down? By the way, the dollar is more or less where it was in the middle of the Clinton presidency on a trade adjusted basis.

Dont' understand what you meant?
if they price their plane in Euro now, it will actually generate more profit for them at least in the short term as 50% of their expenses are in US dollar.

Pricing in Euros protects Airbus's profits but he was talking about marketshare. Pricing in Euros doesn't protect customers of Airbus, who would have to swallow the cost of an appreciated Euro or have to hedge against increases in the Euro or else look elsewhere for cheaper aircraft. To maintain marketshare Airbus would have to respond by cutting prices in Euros to become competitive with Boeing's dollar based prices, which would eat into profits unless they source more parts from non-Eurozone suppliers.
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AirbusCanada
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 1:17 pm

Pricing in Euros protects Airbus's profits but he was talking about marketshare. Pricing in Euros doesn't protect customers of Airbus, who would have to swallow the cost of an appreciated Euro or have to hedge against increases in the Euro or else look elsewhere for cheaper aircraft. To maintain marketshare Airbus would have to respond by cutting prices in Euros to become competitive with Boeing's dollar based prices, which would eat into profits unless they source more parts from non-Eurozone suppliers.

You forgot the other side of the coin.
Let's say Airbus start using Euro as standard currency to sell Aircrafts and pay their suppliers.

Now let’s just say the dollar goes down 10% against other currencies.

Airbus lowers its prices by 10 percent to stay competitive.

But airbus will also save substantial amount by paying its suppliers in Euro, also it will save money on imported machinery.

On the other had Boeing has to pay more $$$ to its overseas subcontractors and pay more for imported machinery.


In A global organization, like Boeing and Airbus, I don’t’ think there will be any long term effect no matter what currency they charge to sell their planes.


 
a380900
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 1:46 pm

Well, I still think Airbus should go for all euro trading. Now is the time. The Eurozone should also push for trading oil in Euro. All producing countries don't have to make the switch at the same time. One or two could be a start.

The dollar is weak nowadays, if the Euro does not take advantage of period of weak dollars to get a bigger pie of the international trade and reserves then it never will and there was no point in building this currency. It's time to go for the jugular. I would have expected this to take much longer but since the US are erring with Georgie Boy, let's make the most of it.
 
atmx2000
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 3:36 pm

You forgot the other side of the coin.
Let's say Airbus start using Euro as standard currency to sell Aircrafts and pay their suppliers.

Now let’s just say the dollar goes down 10% against other currencies.

Airbus lowers its prices by 10 percent to stay competitive.

But airbus will also save substantial amount by paying its suppliers in Euro, also it will save money on imported machinery.

On the other had Boeing has to pay more $$$ to its overseas subcontractors and pay more for imported machinery.

In A global organization, like Boeing and Airbus, I don’t’ think there will be any long term effect no matter what currency they charge to sell their planes.


That is assuming that Boeing is paying foreign contractors in their local currency as opposed to contracts in dollars, or that Boeing and Airbus source the same fraction of parts from various countries. But that is not the case for any aircraft either company sells currently. Airbus and Boeing's current aircraft have more content from Europe and the US respectively, which means there is an advantage to be gained from currency shifts. And while Airbus and Boeing as higher level integrators may be able to source parts from cheaper locations to stay competitive, the many aerospace suppliers in the US and Europe that sell to these companies will be effected by the currency shifts.

The dollar is weak nowadays, if the Euro does not take advantage of period of weak dollars to get a bigger pie of the international trade and reserves then it never will and there was no point in building this currency. It's time to go for the jugular. I would have expected this to take much longer but since the US are erring with Georgie Boy, let's make the most of it.

Are you sure Europe really wants this? I don't think they can handle the implications of being the major reserve currency with the current economic state of France and Germany. I seem to recall various Euro politicians complaining about the weak dollar over the last year. Yeah, its helping with inflation, but its making domestically produced goods less competitive at home and abroad.
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N79969
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 4:38 pm

Atmx2000 is right. It is not just a few European politicians who are concerned about the stronger Euro. I think there is widespread angst what could happen if the trend continues. There is not a whole lot of room left before a strong Euro could choke off anemic growth there. There are no signs that they are interested in currency intervention either.

A380900's post belies what seems to be a common European view: that Europe can only succeed by taking away from the United States. This zero-sum game view is a false and unhelpful idea. But it actually goes a long way in explaining a lot of European, particularly French, policy.

The creation of the Euro allows firms and individuals in the Euro area to eliminate currency risk while trading in the zone. That is a tremendous benefit. The Euro may replace the USD as the reserve currency of choice but I also don't think that Germany and France are really interested in seeing that happen.

What would happen if Airbus priced in Euros?

For a large number of customers, the price would go sharply up. Don't forget that Airbus does quite a bit of business in the U.S. United was their largest customer (in terms of number of airplanes) until Lufthansa recently overtook them. Other countries such as China also hold a lot of USD. Airbus would join other Europeans firms that are taking a beating as the Euro appreciates and erode or even lose their pricing advantage.

They would of course save money on dollar priced components such as avionics and PW/GE engines.



[Edited 2004-11-28 08:55:49]
 
atmx2000
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 5:45 pm

What would happen if Airbus priced in Euros?

For a large number of customers, the price would go sharply up.


There would be no price change until the currencies shifted again. Airbus would likely convert prices at today's exchange rates, unless the profit margins are already too low. The customers would no see change today. The key issue is that the risk for dealing with the euro's trade weighted exchange rate is transferred from Airbus to its customers.

[Edited 2004-11-28 09:52:09]
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N79969
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 6:58 pm

My assumption is that the dollar will keep moving down for a while longer. I think the dollar is still overvalued even as it sets new lows. At some point, Airbus will have to revise prices upward. I think that point would be reached sooner rather than later if Airbus actually started collecting Euros instead of USD. As a practical matter, I believe that Airbus customers and potential customers would see the changes pretty quickly.

That is a good way of framing the key issue of switching from USD to Euro.
 
dtremit
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 8:20 pm

United was their largest customer (in terms of number of airplanes) until Lufthansa recently overtook them.

Are you sure of that? As far as I can tell, Lufthansa only has 134 Airbus aircraft, compared with 152 for United, 158 for Air France, and 161 for Northwest. Largest in monetary value I could see, with all their widebodies.
 
N79969
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 8:27 pm

Dtremit,

I should have added a "at one point in time" disclaimer. NWA and Air France are still able to take delivery of airplanes so they have eclipsed United.
 
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Buyantukhaa
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RE: Why Not Price Airbus' Planes In Euros?

Sun Nov 28, 2004 11:48 pm

I wonder why this thread focusses so much on Airbus only. As said before, Boeing gets a considerable part of its components (more than 50% for the 7E7 as said above) from other parts of the world, mostly from Europe and Japan. The dollar trend being as it is, those components should get more and more expensive, so it would make sense for Boeing to do something similar. I am sure though that both Airbus and Boeing (or any other aircraft manufacturer) have hedged against currency exchange rate fluctuations.
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atmx2000
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 12:07 am

I wonder why this thread focusses so much on Airbus only. As said before, Boeing gets a considerable part of its components (more than 50% for the 7E7 as said above) from other parts of the world, mostly from Europe and Japan.

Because the currently manufacturered Boeing aircraft are sourced more from the US, and the euro-dollar exchange rate has changed the most because other countries have been slowing down or fixing their currencies in relation to the dollar.
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Ken777
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 12:34 am

I would expect that, at the current time, the lower dollar does benefit B more than A. The real issue, however, is the degree that B can take advantage of the situation. If they don't increase orders because of the lower dollar then the changes in exchange rates are not going to help them.

The changing dollar may help sell the 7E7 in the UK or Europe if there are airlines that work out a financial approach that takes advantage of the situation. The traditional advantage of reduced comparative labor costs from a dollar decline, however, does not help a lot when the 7E7 can be assembled in a few days.

Airbus has a "cushion" in terms of overall sales - their cornerstone of commonality - and this should protect them for other platforms.

You can be sure that both A & B are working to avoid problems, or take advantage, of the changing dollar.

In terms of pricing oil in Euros, it makes no difference - the producers would still convert the dollar price to Euros. Oil, but the way, is one area where countries using the Euro may be benefiting - as long as the governments don't take the savings instead of giving them to the consumers.
 
zvezda
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 1:02 am

A380900 wrote:
"The Eurozone should also push for trading oil in Euro. All producing countries don't have to make the switch at the same time. One or two could be a start."

The Eurozone has been pushing this hard for years. Not a single producer outside the Eurozone is willing to take Euro for oil -- not Russia, not the Middle East, not Africa, not Britain. Every producer says "No dollars, no oil."

Someday, that might change, but there is no indication that it will be soon.
 
atmx2000
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 2:03 am

In terms of pricing oil in Euros, it makes no difference - the producers would still convert the dollar price to Euros. Oil, but the way, is one area where countries using the Euro may be benefiting - as long as the governments don't take the savings instead of giving them to the consumers.

Taxes are such a high percentage of fuel costs in Europe, so I'm not sure how responsive the price of fuel would be to changes in the price of crude oil.

Not a single producer outside the Eurozone is willing to take Euro for oil -- not Russia, not the Middle East, not Africa, not Britain.

Why would they, when the Eurozone is taxing the product to discourage its consumption and when most of the world is tagging their exchange rate to the dollar. The only advantage is that the euro has appreciated so theoretically the value of oil would have gone up. However, I suspect a reason why oil has gone up in price is because the dollar has gone down and oil exporters operating through OPEC are trying to maintain their buying power by pushing oil prices up. If crude oil fluctuates with exchange rates, then there is no disadvantage to pricing in dollars, and there is no incentive to change.
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burnsie28
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 3:37 am

Why, the real answer is because the US dollar is the most recognized currency in the world.
 
a380900
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 4:49 am

"Why, the real answer is because the US dollar is the most recognized currency in the world."

Not necessarily forever. Especially with the way things are going these days. The current administration is testing the dollar's strength. We'll see what happens!
 
warren747sp
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RE: Why Not Price Airbus' Planes In Euros?

Mon Nov 29, 2004 11:59 pm

Right A380900
you and Chirac are such wishful thinker trying to reclaim an empire long gone.
Countries like CHINA or Japan will never switch to Euro neither will the Middle Eastern oil exporters. so how do you plan to go for the kill?
W
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trex8
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 10:54 am

If the $ keeps dropping, the Chinese and Japanese(and Hong Kong and Korean and Taiwanese and Singaporeans) are not going to sit around and watch their forex reserves decline significantly in value and not do something.There is no doubt that they will (and already have to varying degrees) increase their Euro or Yen share of their reserves, its just a question of how much and how fast. The saving grace for the US is that all of them, except the Chinese, probably have enough regard for the US that they won't all simultaneously dump $s and really make it drop precipitously even further!
 
burnsie28
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 10:58 am

Its not what the dollar is worth, its the fact everyone knows what it is, in the world 93% of the people if they saw a dollar bill they would know that its US currency, thats why they do it, nothing to do with the value of the dollar, btw, the dollar will gain again, this happens all the time, its a repeat of history, it wont be long now before the dollar shoots back up
 
a380900
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 12:53 pm

Regards for the US has been hurt quite a bit in the last few years. No offense but that's true. Ask any foreigner around you.

Warren747sp. I think countries could switch some of their reserve to euros (as Russia said it would last week). Once they hold more Euros than dollar they could sell their oil in euro without fearing a fall of the dollar. It is always hard to prevent everyone from doing something. Today, the value of the dollar is vulnerable to Venezuela declaring it is selling oil in Euros. What an empire! Anyway, that's the rule in a free market!

No kidding: if Venezuela says that tomorrow, no matter if they end up doing it in actuality, the dollar is down 10% during the day!

The undisputed rule of the dollar is about to end. It is a matter of when. I would bet on sooner rather than later.
 
komododx
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 1:01 pm

Well I think we can all assume (by that word some will already know I'm an economist) that most of the customers of Airbus pay or are invoiced in dollars. Having experience working for a coal trading company in Ireland that has its accounting in Dollars but that has sub-contractors invoicing in Euros, at the end of the day it is much easy just to deal in one currency and not have the risk of losing money through the exchange rate.

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burnsie28
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 3:05 pm

The undisputed rule of the dollar is about to end. It is a matter of when. I would bet on sooner rather than later.

I can see that you have not taken Economics or are very poor at it, the dollar was in the same position several times before, its more of a matter of when the dollar will rise again, which is likely to be soon.
 
katekebo
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 6:43 pm

To A380900,

Maybe a little bit off topic...

The world economy will be dollar based at least for the foreseeable future. Current dollar lows (and the huge budget deficit) are a temporary issue, and they are actually playing in Americas advantage by making their exports more attractive and reducing "discretionary" imports into the US (for example French cheese, wines, and other products), so helping Americas trade deficit. While the government budget deficit is a serious problem, USA has a history of successful solutions for this issue, and enough controls over its financial market to avoid a disaster. More importantly, the American government AND industry have the resolve (nice term borrowed from Mr. Busch) to act upon the problem, when needed. Unfortunately, this is not the case for Europe.

The European economies have much more serious, long term problems. The first one is the growing social funding deficit, which will only get worse and worse over time. The second problem is excessive taxation which discourages consumption and consumer spending (which, in turn, is the main driver for the economy - consumption means jobs for more people, who in turn have more money to spend).

Just have a look at a couple of example. How much does it cost you to buy a house in France? Can you afford a house like the one somebody with a similar education / level can buy it the US? How much will be your pension? Compare it with the retirement package of somebody who works for a major American company. And you will probably have to work until 65 years old (or more), while your American peer will retire before 60. And, to make things worse, European governments lack the decisiveness (and public support) to act upon this problem.

So far, European economy has been relying of high tech exports (physical goods and technology), to keep a healthy trade balance. But things are changing. Emerging economies in Asia are taking over the technology front, at least in manufacturing area. They are also learning fast, and soon will become the leading producer AND developer of consumer technology goods. Just look around and see how many of the goods that you use daily (your computer, telephone, TV, DC player, etc.) are still made in Europe - most likely most of them (if not all) come from Far East. The same will happen (or is happening) with cars - the Far East cars are simply better and cheaper than whatever the European companies can put on the market. Importantly, companies like Toyota and Hyundai are spending several times more in R&D, so the technology and price gap between European and Far East cars will start growing.

Second, European exports are becoming simply too expensive to be attractive. European governments know that and just last week asked for help - guess who - to prop up the dollar and avoid further appreciation of the Euro.

I work for a major consumer goods company. Traditionally, 10-20 years ago we would buy making and packing equipment from well-established European suppliers (Germany, Switzerland, etc). Then the Italian era came - a lot of equipment would be supplied out of Italy because it has cheaper (and almost as good) as the one from Germany. Now, we (and all other major companies) are looking East. Just to give you an example - Coca Cola has recently switched its standard bottling equipment supplier from a European company to China.

Finally, the success of European economy has depended, what a paradox, on the success of America through direct financial help shortly after World War II, and then imports from Europe and huge foreign capital investment by American companies into European operations.

Net, American economy is much more flexible and resilient - it has the capability to build itself from within. European economy has grown thanks to cheap supplies from the colonies during 18th and 19th centuries, and then, American help (direct and indirect) during secong half of 20th century.

 
FLVILLA
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 8:31 pm

Well theres only one way to sort out this dispute, switch everything into £ Sterling  Big thumbs up
I hope in life i can work to live, not live to work
 
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Buyantukhaa
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 8:55 pm

Pardon me, but the only way to solve this is to price them all in Mongolian Tugrik. After all, the world hasn't seen an empire as vast as Mongolia  Wink/being sarcastic
I scratch my head, therefore I am.
 
flyabunch
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 9:47 pm

Not all Americans think the President Bush is leading us into "a vast pit of hell". In fact 51% said that they felt he was the better option on Nov. 2.

Perhaps the most important factor in relation to the value of the dollar is that most people, the media especially, place much too much importance on the President for the current value of the currency. While it is a factor, market conditions, trade fluctuations, and other economic factors that are outside the direct influence of the administration also have a big influence on the value.

If you look at the fluctuations in the dollar over the past fifty years, there is nothing disturbing or unusual about the current situation. All countries and most major international companies hedge their bets on fluctuations all the time anyway. If they don't, they lose.

Mike
 
tripple7
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RE: Why Not Price Airbus' Planes In Euros?

Tue Nov 30, 2004 10:25 pm

We will see an increase in exchange rate of the euro as long as the US central bank does not do anything about the US interest rate.

It would become time for Alan Greenspan to raise interest rates. With the current low interest rates, he has paved the way for unlimited consumerism. It is time that interest rates will be increased in the US, to make sure that americans start saving money in stead of spending and borrowing. The average American has spend in the past 50 years for every earned dollar more than a dollar. Currently it is at a high. For every earned $1,00 an American citizen is spending $1,04. This more or less means that Europe, China and Japan are lending the US $1,7bln a day! Furthermore government spending in the US has lead to enourmous budget deficits all having an negative influence on the dollar. American deficits are dangerously big. A revaluation of Asian currencies could reduce American deficits. Most importantly China would have to revalue their currency with about 15% in comparison to the US$, which it is not very likely to do. China for example has its currency, the yuan, linked with the US dollar, but it it is more than likely that China will chose a mixed basket of currencies (including Euro) to link its currency with.
 
elwood64151
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RE: Why Not Price Airbus' Planes In Euros?

Wed Dec 01, 2004 7:50 am

the real issue is the US trade deficit and the deficit spending by especially the present administration.

The "real" issue is China's currency is pegged to the Dollar, the Yuan falls as the Dollar falls. With a policy of lowering the dollar against other currencies to encourage US exports, USD fell. So Chinese citizens sold dollars for Yuan to convert to Euros, GBP, or other currencies. Then others both in the US and other countries see the weakened dollar and sell their dollars in an effort to reduce losses. The cycle continues and continues as both Yuan and Dollar continue to decline and remain undervalued due to speculation by the world markets.

Wonderful article about this in the Economist a couple of weeks ago...
Those who fail to learn history are doomed to repeat it in summer school.