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GRAFENWÖHR, Germany — The dollar hit a 20-month low against the euro Tuesday, falling to .7418 at Community Banks on U.S. military bases in Germany and England.

That’s the lowest point since it bottomed out at .7260 on March 17, 2005. It’s also a nearly 10 percent drop since the beginning of the year, when $1 was worth .8242 euro.

Unfortunately for servicemembers living in Europe, the dollar’s decline hasn’t resulted in an increase in their cost-of-living allowance, at least not yet.

In fact, the last time the troops saw a change in their paycheck was Oct. 1, when their COLA actually went down.

At Grafenwöhr, for example, the daily COLA rate for an E-6 with six years’ service and three dependents who lives off-base dropped from $25.58 to $23.88 in October.

At the time Steve Bridges, director for finance operations with the Germany-based 266th Finance Command, said the allowance went down for most of Europe because the dollar was expected to strengthen.

Officials at the 266th Finance Command did not respond by deadline to questions about the COLA rate on Monday.

Decisions to change COLA adjustments are made generally on the 8th and 23rd of each month, with the new COLA rates taking effect at the beginning or in the middle of the month, an official with the 266th Finance Command said in May.

Any change in the allotment in Europe happens when the euro’s value against the dollar fluctuates by more than 5 percent, with the latest change — the Oct. 1 decrease — coming when the dollar was .7671 euros. A 5 percent drop from that rate would be .7287.

Growing pessimism over the dollar facilitated a sell-off Friday in currency markets, according to The Associated Press.

A key to the market’s readiness to go negative on the dollar is the growing belief that the Federal Reserve Board’s next policy move will be an interest rate cut in an effort to spur economic growth, the AP reported.

The weaker dollar means that purchasing goods and services off-base is getting more expensive as consumers rush into the holiday shopping season.

Army and Air Force Exchange Service spokeswoman Debbie Byerly said the weak dollar may have been a factor in a 13 percent increase over last year in business at AAFES stores over Thanksgiving weekend.

“When the dollar is weaker, AAFES is definitely better value than the local economy,” she said.

Grafenwöhr-based 529th Ordinance Company soldier Pfc. Merii Ngiracheluolu, 21, of Palau, who recently returned from a yearlong mission to Iraq, said the weak dollar means she does most of her shopping on-post.

But Grafenwöhr-based soldier, Sgt. Shane Lord, 26, of Los Angeles, said he spends about half his paycheck off-post, despite the dollar’s decline.

“I’m off-post most weekends. I spent most of this weekend in Nuremberg. Except for food and groceries, I do most of my spending on the economy,” he said.

If the Army wants soldiers to use off-post services, it should have left COLA at the rate it was at before October or increased it, Lord said.

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Seth Robson is a Tokyo-based reporter who has been with Stars and Stripes since 2003. He has been stationed in Japan, South Korea and Germany, with frequent assignments to Iraq, Afghanistan, Haiti, Australia and the Philippines.
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