Browsing Posts tagged exchange rates

Canadian dollar

It’s not hard to hear a lot of gloom and doom in the news these days, but if you’re a traveler, this is shaping up to be one of the best summer vacation seasons in a long time.

Good news for the Yanks

TransylvaniaFor Americans, this is probably a temporary gift from the gods that we should all take advantage of. Our ineffectual congress and weak housing market aren’t going to suddenly do an about-face and our long-term fiscal debt issues still need real bipartisan compromise to tackle. Also something not very likely in this climate. Compared to Europe though, we look like a superhero standing next to a patient in a hospital bed—our battle scars be damned. So the euro is hovering around 1.25 to the dollar and more than a few pundits have said it’ll go to parity if Greece drops the euro and Spain and Italy default. When the euro goes down, so does the Hungarian forint, the Bulgarian lev, the Czech crown (from 17 to 20 in the past year), and the rest. Not hand in hand, but on the trend line. The expensive destinations in Europe are not as expensive this summer and the cheap ones are cheaper.

In the rest of the world, it’s a mixed bag, but the U.S. dollar is way up against some key currencies for us. Right now you get 14 Mexican pesos to the dollar, compared to 11 or 12 most times I’ve been there over the past decade.  You get 55 Indian Rupees now for a buck instead of 45 this time last year. Exchange rates are better in more expensive Brazil, Chile, and South Africa.

But let’s face it, the way most Americans travel is…in the USA. So gas prices dropping from $4 to $3 a gallon is a big deal. Take that road trip before the nutjobs in Iran start shouting again. I doubt we’ve seen the end of fuel price spikes. Someday soon though, offending airlines might actually do the fair thing and ratchet back those hated “fuel surcharges.” Or at least stop slapping frequent fliers cashing in miles for them. (I’m talking to you British Airways.)

Good news for the maple leaf backpack crowd

For Canadians, your currency is as strong as its been in decades and the natural-resource-based economy has allowed you to prosper in the current commodity climate. Like Americans, you take a lot of vacations domestically and have to go quite far to travel internationally, so lower fuel prices can make a big difference in the budget. At 1.3 loonies to the euro (sometimes less), Europe’s costs are at a record low for the canucks. Go!

Plus the math’s easier these days. At near-parity with the U.S. dollar and Australian dollar, you can cash in loonies for something else that’s easier to exchange around the world and not have to do double-math on what you’re spending.

Do Aussies really need another reason to travel?

Breakfast in Bali

You Australians are currently blessed with an exchange rate your parents probably never dreamed was possible. Places that used to cost them a bloody fortune are now cheaper than home. As with Canada, an economy based on the extraction of things in the sparsely populated ground can mean boom times when said things are in demand. So while Australia has gotten crazy expensive for citizens from the rest of the world (okay, except Japan and Scandinavia), when you take your local earnings abroad it’s party time.

Like the rest of us though, don’t assume this good fortune is going to last. It’s probably not sustainable to count on rich commodity prices forever, especially gold, and China’s not going to keep buying whatever the world can mine forever. Travel now and make good memories.

Where does that leave Europeans?

It’s hard to find a silver lining in Europe, but despite your faltering currency, most of the world is still cheaper than where you live now. And hey, if you come visit us in the U.S. you can fatten up and buy some electronics on the cheap.

Otherwise, take advantage of  your own continent’s problems and roll out your own personal stimulus plan. Grab one of those unbelievable package deals to Greece or the coast of Spain. Rent an apartment in Barcelona or Athens from an owner that needs the money. Buy a vacation home on the cheap from someone who really needs to unload it. There are a lot of bargains out there on places you can reach by train or a budget airline.

Take advantage of what may be temporary

In five or ten years from now, we may look back on this summer as one of the great opportunities to travel well for less. Don’t let it pass you by.

[Top Flickr photo by Naharb, Vegemite one by joeywan]

If you had India on your short list or you’re planning how fast to get there on your round-the-world journey, take a look at the exchange rate right now and that might sway you.

In the quirky way that world currency markets work, Europe’s troubles are the U.S. dollar’s gains, despite all the problems on this home front. So while it may be short-lived, we’ve entered one of those periods where this is a good time to visit some countries because you can get a lot more for your money on the ground.

Take a look at that chart above. You don’t see a dramatic spike like that very often and when you do it spells big opportunity—an imbalance that hasn’t had time to right itself. Prices haven’t risen in rupees, but you’re getting a lot more rupees for your dollars.

After moving in a fairly narrow range from 44 to 46 most of the past two years, the rate is now more than 52 to the dollar. That’s an 18 percent rise from the bottom. Plus in India you really can buy something for that 8 rupees extra. A few samosas at least. A cup of tea on the street. Or a bunch of bananas.

Or look at it this way: that extra 8 rupees the tuk-tuk driver is trying to charge you isn’t worth stressing about. You just got it as a bonus.

India was already near the top of the list of the cheapest places to travel in the world. If you’re traveling with dollars, it’s looking even better right now.


You won't believe your calculator if you figure this one out. But nice ribbons!

Currency exchange rates can make a huge difference in prices where you are going. Travel prices fluctuate a lot because of this and the exchange rate can take a country from a decent value to being way overpriced in the case of just a few years. It’s happened to Australia, Brazil, Canada, and South Africa most recently, and plenty of others before that. Here’s what to keep an eye on in the current roller coaster climate of global finance.

At least consider a package deal for a short trip

The only true way to protect yourself from currency fluctuations, really, is to buy some kind of package deal in advance that removes all variables. You pay one price for everything (or close to it) and you don’t have to worry much about rates on the ground once you get there. It’s one of the main reason some people like cruises: they know everything they’re going to get and roughly how much it’s going to cost them. No adventure, but no surprises either.

If I were advising a relative on a vacation to Europe anytime soon, I’d definitely tell them to get a package tour. Ironic and annoying as it may be, that bundling often makes it cheaper than being an independent traveler: the tour agency is negotiating lower group rates on flights, hotels, transportation, and meals. I can do better than them in a cheap country by being smart, but it’s tough to do better in an expensive one that requires a long flight, like Italy, Japan, or Australia. (For example, Budget Travel’s website recently listed a 7-day tour of Copenhagen and Stockholm for $1,187 from NYC per person: flights, fuel charges, hotels, breakfast, and taxes. Try working that out on your own.)

U.S. dollar vs. Swiss franc, past two years

Avoid Switzerland for now

Switzerland has never been a bargain, but suddenly it’s up there with Japan for the title of most expensive destination. That’s because the inability for the U.S. Congress to act like adults when managing their budget led to a downgrade of U.S. debt. (Despite what some think, all budgets have two sides to the ledger: spending AND revenue.) That left the Swiss franc as the only currency looking rock solid. Which means lots of countries and investors are buying Swiss francs by the bundle. In a big country, this wouldn’t matter, but for tiny Switzerland, it’s a disaster. It’s made the value of their currency rise by a third.

Check out this PlanetMoney podcast if you want the whole story, but the bottom line is an already expensive place just got crazy expensive. Ski elsewhere this winter.

Where have we been before?

It makes lots of sense to check historic exchange rates here. Thailand has been at 40 baht to the dollar and it’s been at 30. Your perception of what a screaming bargain this country is will be a whole lot different depending on what the rate was when you were there. When I first visited Canada many years ago, 70 U.S. cents bought one loonie. Now they’re at par, with the Canadian dollar slightly higher as I write this. Some things already seemed expensive at the lower rate—like cigarettes, music, books, restaurant meals, and beer. So imagine how it feels now. On the other hand, Mexico at 12 pesos to the dollar felt a whole lot better than the first time I went there, when it was 10 to the dollar. If the rate is good now, or if it’s going through some crazy up or down move that’s out of the norm, you’ll know what to do, based on how badly you want to go there right now.

Are they tied to the dollar?

As noted in this recent post on how you would think Africa would be a cheap travel destination, but it’s not, where the currency is pegged to matters a lot. If it tends to follow the euro, that’s different than if it follows the dollar. This matters in Africa, it matters in the Caribbean, and it matters in Asia: in all these places one country may be following the Euro, while one right next to it may be following the dollar or even the pound sterling.

Which brings us to Latin America. It used to be that all these countries moved in lockstep with the U.S., so the rates barely budged. That’s still true in some that use the dollar (Ecuador and Panama) and others that might as well, they track it so closely (like Honduras and Belize). There are a few outliers though, resource-rich countries with booming economies that are floating their own boat on the international exchanges, most notably Brazil and Chile. It’s been a good while since either of those were a bargain—though Chilean wine remains a fantastic value. And you should have lots of Brazilian music in your collection, of course.

Overall though, in a world of uncertainty, these are your best bets for stability for those making their money in U.S. dollars. These economies are strongly tied to the U.S. and their people are getting lots of remittances from relatives working there. Huge spikes or declines in the exchange rate don’t do anyone any good. So “steady as she goes” seems to be the mantra. You won’t get any big nasty surprises going to any of the Latin American countries profiled in The World’s Cheapest Destinations.

Here’s a chart on Argentina though, for comparison purposes. It’s not as dramatic as it seems if you look at the change in percentage terms, plus inflation there has eaten up much of the gain. And now the government is charging you $140 before you even leave the airport. Even factoring in all that though, it’ll certainly cost you far less than the country profiled in the other chart above. That’s really the key point: keep it all in perspective because the cheapest destinations will usually still be a better value than the most expensive ones, no matter what kind of European meltdown, Asian currency crisis, or political posturing in the U.S. is going on.


Argentina travel

Dollar vs. Argentine peso, past two years



For those who typically skip intros in books or take prices in travel articles as gospel, here’s some news: prices for hotels, restaurants, taxis, buses, visas, and admissions will change. They are probably more liable to go up than down, just as they have for centuries.

U.S. dollar vs. Hungarian forint over 3 years

No book author likes to get negative reviews, so it always pains me a little when someone has something bad to say about The World’s Cheapest Destinations on Amazon. The other day someone put up a review complaining that the travel prices in Southeast Asia were higher than what’s listed in my book.

Well duh.

As the publishers put in every guidebook intro, travel prices can and will fluctuate, often as soon as the book has left the printer. On the web the prices may be more updated…or not. I don’t know of any website that adjusts its sample prices for a destination every week depending on inflation, currency exchange changes, or seasonal variances. (If you know of one, put a link in the comments as I’d love to see that.)

The value of the U.S. dollar on the world market bounces up and down just as frequently as the world’s stock markets and for the past two years it’s been more down than up. In some places this doesn’t matter much, especially in Latin America, whereas in other places it can be a game of “follow the bouncing ball.” The prices you pay in baht or rupiah or soles are always most dependent on that exchange rate—unless you’re in a country where the rate stays fixed, like Ecuador or Belize.

U.S. dollar vs. Thai baht over 3 years

Here’s a good site for looking up current exchange rates. Here’s one for looking up historic exchange rates to see how things are now compared to the past. Here’s a link to the Lonely Planet Thorn Tree message board so you can see what backpackers are paying in the here and now.

For the most part though, it’s all relative. As prices go up in Thailand, for example, they usually also go up in more expensive places like Japan and Singapore. If they rise in Hungary, you can bet they’ve risen as much or more in France. The cheapest places to travel are still generally the cheapest places to travel, though I usually make some tweaks from edition to edition. (Turkey and Morocco are probably out for the 4th edition coming in 2012.)

So, if you’re going to pick up my book, or any guidebook or travel app, for that matter, look at the budget ranges as a general guide and don’t treat specific prices as gospel. Financial markets are always in flux, so the price of tortillas, rice, beans, and labor will change every month you are on the road. Take enough money to roll with it, go to the right destinations, and you will travel well for what would be a pittance at home, no matter what’s going on in the world commodity and currency markets.

cheap living abroad