Dollar continues to slide;no COLA increase — yet
The dollar continued its tumble against world currencies, reaching a record low against the euro.
To get an idea how far the dollar has fallen, the greenback on Friday briefly traded lower than the Canadian dollar — nicknamed the “loonie.” The last time that happened was when Jimmy Carter was in the White House.
And it’s not supposed to get any better.
Most global analysts predict the dollar would continue its slide and likely fall even more next week.
On Friday, a dollar bought .6935 euro cents at military banking facilities across Europe. The dollar fell further on Saturday to .6921 cents.
One euro will buy $1.449, according to the Community Bank Web site.
To get an idea of how far the dollar has fallen, consider this: on Sept. 21, 2005, a 30-euro dinner for two at the local restaurant would have cost $37.50. That dinner would cost more than $43 today. An 80-euro hotel room in your favorite European city in 2005 would have cost $100. Today, that room would set you back $115.
So, now that the dollar has fallen, when will the cost-of-living allowance go up?
For the moment, the cost-of-living allowance for military servicemembers and post allowance for civilian workers overseas has not changed. But that is only because the dollar dive has come in between pay days.
“I think if [the dollar] stays at this level there is no question there will be a change” in COLA, said Steve Bridges, the director of finance operations for the Germany-based 266th Finance Command.
The cost-of-living allowance helps servicemembers maintain their purchasing power overseas when costs go up. The exchange rate is one factor that affects the allowance. When the dollar is weak, the allowance typically goes up. When the dollar is strong, the allowance usually drops.
In addition to the exchange rate, surveys influence the allowance. In the coming weeks, volunteers will be tabulating the costs of various items both at base exchanges and off-base stores most frequently shopped by Americans. Bridges said those results should be available around the end of November.
The Per Diem, Travel and Transportation Allowance Committee in the United States usually posts changes in COLA the first work day before the change goes into effect.