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What's Correct Value?
October 28, 2008

As I sit here this morning wondering what to write, my eye keeps going back to my watch. It is a euro watch. It was created by the Austrian Mint before the euro was actually introduced into circulation in 2002.

The face of the watch depicts the design of the 1-euro coin, though it is much larger than the coin is.

I think about this because of the large fluctuations that have occurred in the foreign exchange markets since the euro was created.

At the beginning of 1999 the euro came into existence as an accounting convention in the nations that agreed to use it. Their national currencies were fixed to the euro.

On the foreign exchange market the euro began trading at approximately $1.17.

Wow, you might say. The euro today is $1.25. That's remarkably stable.

If you had no other information, that would seem to be a reasonable conclusion. However, the euro trades everyday on the world's foreign exchange market and its price has been anything but stable.

It began life by declining against the dollar. It got to 82 cents in 2002 and then began to climb. It hit $1.60 just a few months ago and began to decline again.

Now it is at $1.25. Who knows? It might even see $1.17 again in time for its 10th anniversary Jan. 1.

Here's the test. What's the correct value?

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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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