Since January 2002, the U.S. Dollar (USD) has spiraled down about 30 percent in value vs. the Euro (http://finance.yahoo.com/q/bc?s=USDEUR=X&t=2y or http://tinyurl.com/2zeuw). This year (2003) alone, the dollar has sunk about 15 percent (http://finance.yahoo.com/q/bc?s=USDEUR=X&t=1y or http://tinyurl.com/2cwd5): the Euro is now worth about $1.24. This means for every one Euro, its exchange rate is about 1.24 U.S. Dollars or conversely for every one Dollar the exchange rate is approximately 0.80 Euros.

This is actually good news for eBay merchants who sell their wares in the international marketplace. Costly international shipping rates have historically thwarted European eBay users from placing bids on American point-of-origin goods. Now the cost of shipping can be absorbed by the sinking dollar, making it less expensive and more affordable to purchase Beanie Babies from us Yankees. eBay sellers have seen an increase in the number of international bidders due to this phenomenon. Our friends over in Europe have helped to bid up prices of local auction goods.

Unfortunately this is bad news for American eBay bidders buying in this global marketplace. Not only will American eBay users have to pay the typical costly international shipping fees, they have to pay more for the actual goods themselves due to the dollar's decline - a double whammy.

So what can we do to take advantage this currency phenomenon?

Sellers who have traditionally sold exclusively in the United States (and Canada) should consider selling internationally to profit from the dollar's decline. Sellers can accept funds in U.S. Dollars or Euros through Paypal, a hassle-free process for international buyers and sellers alike. Ever try to process a foreign check in your U.S. bank account incorrectly? Banks charge high fees for doing so, so you may want to exclude this option and stick to PayPal payments for overseas transactions. If they wish, U.S. sellers can specify that they only accept U.S. Dollars. (Be sure to clearly state terms and conditions in the auction listing so bidders understand their payment options!)

Bidders may consider hedging themselves (protecting themselves from the dollar's decline) by transferring part of their U.S. dollar balance in Paypal into Euros. Currency balance transfers are effortless and can be found in the "Account Overview" tab in Paypal. Just click the "Transfer" hyperlink and the rest is self-explanatory. (Make sure you understand PayPal's polices, stay up-to-date on policy changes, and understand the risks and fluctuations of currency exchange.)

Take note, the exchange rates used by Paypal lag behind Interbank rates (http://www.paypaldev.org/topic.asp?TOPIC_ID=901) and are not as favorable as those rates (justifiably so). As I type this on Sunday 3:48 EST on December 28, 2003, Interbank rates are 1 Euro = 1.24357 USD while PayPal rates are 1 EUR = 1.21 USD... a difference of .03357 cents.

There are added risks in trading internationally. PayPal Seller Protection Policy does not cover international shipments. Read PayPal's policy about international shipments: http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/shipping-intl-outside.

PayPal also warns that shipping to a country not on its list of PayPal approved countries is a violation of its service and may result in termination of your account. http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/approved_countries-outside.

The way I handle the added risk of international trading is to use Escrow.com for transactions of more than $300. I require international bidders to contact me before bidding on items greater than $300 and ask that users are registered for six months and have a feedback rating of at least 4 in order to bid. If you require the use of an escrow service, make sure you state so in your auction, and be clear on who pays the escrow service fees (usually the buyer). There are fake escrow Web sites, so use caution.

If you are prepared to do your homework and accept additional risks, international trading may give you a competitive edge.

Author's Disclaimer: This is not a recommendation to buy or sell a security or currency. Always seek the advice of a Financial Advisor before making any financial decision.