Why is the exchange rate from the United States to Europe so extreme?

Answer 1

Record US government debts are dragging the value of the dollar down. Foreign banks, companies and individuals who pretty much own all the debt the US government just don't want to buy any more dollars as they're worried about further decline.

Add to this the fact that Americans have one of the lowest earnings to savings ratios in the world (i.e. most people spend all the money they earn, and quite a large number literally live paycheck-to-paycheck), there's nothing to fall back on should the worst happen (recession/depression). Either would result in more Americans in poverty, more Americans on welfare - and more government debt (to feed all those poor unemployed people - they sure aren't going to re-live the 1930s when over 100,000 Americans died from starvation.

On the opposite side of the spectrum, European banks, companies and individuals own a lot of the US debt, so they're not exactly out of the woods, but their economies, despite low growth, are seen as more intrinsically stable by economists because should the worst happen, these countries have large currency reserves and global assets and most individuals have savings accounts, pension plans and investment accounts they can live off to get over the hump.

That doesn't mean that the US dollar is going to disappear or that the US economy is going to crash. Growth is impressive compared to other highly developed economies. Now, if you could just pay off those debts (generally) and start putting away something for a rainy day (personally), the trend would reverse.

Answer 2

I don't know if I'd call it extreme...extreme would be the United States exchange rate to Mexico. Exchange rates fluctuate as economies change...especially in regards to the US and Europe. In my travel experience, most of the EU nations and the US (although they have flipped back and forth) stay relatively stable in relation to each other. It's the rest of the world that has wild swings.

Answer 3

becuase our goverment screwed up our economy the value of a currency is bases on the countries economoical strength if you will it didnt used to be that bad they it was always worth more (bsp) like 1.2 or so to the dollar but now it's like 1.8 which is ludicrus yea thats why we borrowed to much money from other countries and exported to much of our jobs, oh it's extreme alright if you've ever tried living over there!! how would you llike to pay $10 for a big mac meal

Answer 4

They have been around a lot longer and their economy is the standard but we follow Germany on the industrial side.