Lately returned from a trip to Austria, Klaus Wittauer, an importer of Austrian wine, told me that he is encouraged by a trend in the exchange rate.
As recently as 1 October, one Euro was worth $1.40. Yesterday, the Euro was valued at $1.28.
A silver lining amid the current economic crises, a strengthening dollar helps Wittauer to hold the line on pricing for the new vintage, or at least to slow its increase.
Investor flight from emerging markets over the past few weeks has accelerated this week, pushing the U.S. dollar to new heights, among other things as money is both repatriated from overseas and seeks relative safety in U.S. fixed income.
The dollar hit a two-year high against a basket of currencies with the dollar index up 0.2 percent to 85.6 after hitting a two-year peak above 86.
Investors flee emerging markets, boosting dollar
23 October 2008
Might this augur well for beer?
Combine the decline of exchange rates and the decrease in the price of oil with improved hop harvests worldwide, increased hop acreage, and good barley harvests. Together they might slow the rapid rise in the cost of brewing, and, as well, the cost of beer to the consumer.
Don't be prematurely sanguine, however.
Patrick Casey, owner of Legends, Ltd., imports Scottish and English beers. He told me:
We have tried to hold the price on all UK products, but the cost of glass in Europe has gone up dramatically, resulting in higher prices to me for 2009. However the British pound is going down so I will hold the price.
Hugh Sisson, owner of Clipper City Brewing, noted that hop prices will continue to increase for another year or so. There's a lag time between the planting of new hop bines and the harvesting of usable yield.
[UPDATE. So much for prognostications: "The U.S. dollar, meanwhile, plunged below 93 yen, a 13-year low, as traders reacted to dismal U.S. jobs data." Friday 24 October 2008. Associated Press.]