UPDATE – This is now a very old post. For current conditions, see more recent posts of this blog!
Headlines have been screaming for months that the US dollar has hit a record low against the Euro. Each time, the low gets lower. Few experts see a US currency turnaround anytime soon. If you’re a European, it’s a great time to visit the US or Canada. Americans and Canadians, however, would be wise to avoid crossing the Atlantic to the old world. Those on this side of the pond can still find a bargain, however, if we pick our destination wisely.
In 2001, you could buy one Euro for 90 US cents; now it takes around $1.20. That one-third decline in value impacts every purchase you make, including hotel rooms, taxis, meals, museum admissions, and drinks.
The UK and Europe, already some of the most expensive destinations in the world, have become even pricier. The dollar’s decline against the Japanese Yen has sent the already high prices there into the stratosphere. Canada, a dependable nearby bargain for Americans, is now 20 percent more expensive than it was two years ago in US dollar terms. Australia and New Zealand have also become far more expensive.
Fortunately, many countries have currencies that are pegged to the dollar. As a result, travel costs in many Asian and Latin American are the same or less than they were two years ago.
Some Asian nations, such as China and Malaysia, trade at an official parity with the US dollar. Others, including India and Thailand, often intervene to keep their dollar exchange rate steady. Americans visiting nearly any place in Southeast Asia or the Indian subcontinent will still find their money going a long way.
Closer to home, most countries in Central America and South America are tied closely to the dollar, either as a trading partner or a currency peg. Panama and Ecuador actually use the US dollar as their currency, while countries such as Peru and Belize hold rates in a narrow band. The only significant Latin American decline in the dollar has been in Chile.
So where is the best deal in Latin America right now? Look to Mexico, Honduras, or Argentina. The Mexican peso is down 20 percent against the dollar from two years ago while the Honduran currency is down 12 percent. Argentina has had a host of problems and its currency is worth one-third of what it was in 2001. These countries are all far cheaper than Western Europe and right now are some of the best values on the planet.