Neo900 and the Euro

The Neo900 project originates from a country in the Euro region, and it is therefore only natural for it to calculate its budget and to keep its financial assets in Euros.

In September 2013, when the project's budget was first estimated, one Euro was worth about USD 1.33. The Euro appreciated slightly in the following months and at the time of the reorganization it was around USD 1.36-1.37. So the project had actually "won" 2-3%.

Then something unexpected happened: the Euro started to drop ... and kept on dropping until it almost reached parity with the US dollar in March 2015. Since then, it has maintained a value around USD 1.08.

The evolution of the exchange rate over the last two years can be seen here.

This means that every Euro of the project's reserves has lost 25-30% of its value in US dollars in the last months. This came as a bit of a surprise to us since, while aware that the Euro wasn't doing great, we did not actively monitor the exchange rate and thus didn't realize just how much it has changed. Not that we could have done a lot about it - there are greater powers than little us at work there.

Unfortunately, most components are priced and have maintained their value in USD. This means that the cost of the components of Neo990, is now significantly higher than planned. Also other costs are influenced by the value of the US dollar and have increased.

This has a number of consequences: first of all, it changes our budget projections. That by itself is not so bad, but it can mean unwelcome news. Also, in case the Euro appreciates, the projections may improve again.

Second, any money we are spending in the course of the project will have its purchase power determined by the exchange rate at that time and nothing that happens later can change that. Therefore, if we buy with a weak Euro, we need to spend more money than with a strong Euro.

This means that, even if the Euro should recover in the coming months, the project cost (in Euros) is permanently affected, because that hypothetical value gain does not affect any money already spent.

The good news is of course that for anyone operating in a currency that has appreciated with respect to the Euro, Neo900 hasn't changed much and may even have become cheaper.