By David C. Harper, World Coin News November 11, 2009

It would be far easier for all of us if the world’s currencies would convert into other world currencies in even numbers, wouldn’t it?

How convenient it would be for all collectors to mentally compare values from country to country if the relationships between currencies were easily calculated in your head.

As it is, you have to be a mental gymnast to value a tray of ancient coins at a bourse table in Europe if your currency of reckoning is the dollar and you must convert from euro prices.

Sometimes we catch a break. As this is written, the euro is trading at just about $1.50 on the head. Other than parity or $2, the $1.50 price makes it easy to make determinations as to whether the coins on offer seem like good buys or not.

Alas, the market swings every day and sometimes over time, even during the course of a week, it can vary substantially. In a little over a year’s time we have seen the euro fluctuate in dollar terms from $1.25 to $1.60, basically measured from the dollar’s low point in the summer of 2008 to its high point just as spring was beginning in 2009 and back to the current $1.50.

As I recall, when I was doing my expense report for last February’s Berlin World Money Fair, the exchange rate was $1.46. Ah, how I wish I could have visited a bit later in 2009 and obtained a much more favorable exchange rate.

Even for the week I was there, every time I made a purchase it converted at a different exchange rate. True, the hotel bill consolidated many transactions into one large conversion rate, but the taxi fares, U-bahn fares and even breakfast coffee at McDonald’s paid for with some cash used as walking around money converted differently.

American corporate accounting even with computer aids, does not seem ready to deal with costs that are not the same from day to day because of the currency conversions. I recall that I was claiming just one exchange rate on the report and mentally toting up some of the conversion losses.

Is it any wonder then that currency fluctuations that drive us crazy with the little things are such business drivers for the big things?

Anybody with coins to sell to European dealers with euros to spend will want to do so when the currency is near the top of its range as compared to when it is at the bottom end.

Since the name of the game is inventory turnover, imagine taking advantage of the $1.60 exchange rate to sell coins and then buy them back a few months later at the $1.25 exchange rate? And now a few months further on, you could be getting ready to sell the coins back at the $1.50 exchange rate.

Currency market craziness spells opportunity.

It is the very inconvenience that creates the arbitrage opportunities between the North American and European continents.

Some progress is being made. The euro has existed for roughly 11 years and now it is used by 16 countries. For them, these aggravations of currency conversion have been eliminated and perhaps a few arbitrage opportunities disappeared, too.

As long as the world can’t count on the euro staying at $1.50, the yen at 100 to the dollar, or the British pound at $2, we all have to stay a little sharper mentally and I can mention this topic the next time the euro swings by $1.50.

More Resources:

• Standard Catalog of United States Obsolete Bank Notes 4-CD Set, 1782-1866

• Fascinating Facts, Mysteries & Myths About U.S. Coins

• 2010 Standard Catalog of World Coins 2001-Date, 4th Edition

• State Quarters Deluxe Collector's Folder