Flush goes the Dollar

Well it’s official. The US dollar is now circling the bowl and going down the toilet. I guess all the supposed conservatives who voted for GW Bush are going to have to take out an extra home equity loan to pay for that summer trip to Europe this year.

But now we’re stuck with this mess and currency traders are tripping all over themselves to make bets it’s going to get even worse. So what do we do?

Come on down, the price is right!
If you’re European, Santa just gave you an early Christmas present. Stop what you are doing, log on to your favorite travel web site, and book a trip to the USA. You’d be nuts to buy expensive clothes, shoes, or electronics at home when there’s a giant 30 percent off sale going on across the pond. Most consumer goods are already cheaper in the US anyway, so the currency slide is making the difference jaw-dropping. Newspaper articles talk of $288 Timberlands for $100, $80 video games for $30, and half-price jeans. Another one in the Wall Street Journal gave a breakdown on IPods and digital cameras, with some avid shoppers saving enough over home prices to finance their whole vacation.

Yeah yeah, I know it’s a hassle getting a visa now and you’re going to have to submit to a fingerprint and a digital photo at customs. But just pretend it’s something you have to do in order to get a giant discount on your wardrobe and electronic toys. (If you told me pints of ale were going to cost me a dollar each in London, you could photograph me from all angles and ink all ten of my fingers!)

For others who have often struggled with a weak currency, such as Canadians and South Africans, it’s time to hit the road. Expensive places aren’t as brutally expensive as they used to be and countries with currencies tied to the dollar (see below) are looking like more of a bargain every week. If you don’t make at least one international trip in 2005, you’re going to hate yourself when you are older.

Americans take heart
OK, we’re looking at a record low against the Euro and a five-year low against the yen. Europe and Japan, already expensive destinations for Americans, are now priced like luxury goods. In popular London, it now takes almost two US dollars to buy one British pound. The Euro is nudging $1.50 at exchange booths in Paris and Rome. What’s not so simple to see is that the problem is spreading to unrelated areas of the globe. For US travelers, hotels and meals are much higher than they were just a few months ago in diverse places such as Australia, Canada, and Fiji. Some of my World’s Cheapest Destinations have gotten noticably less cheap: Morocco, Hungary, and the Czech Republic are the worst extremes.

It’s not all gloom and doom, however. Just pick a country where the dollar is holding steady. It’s a big world and there are still plenty of travel bargains to be found.

Habla Espanol?
Here’s an easy rule of thumb for value travel: go to any country in Latin America where Spanish is the main language. The dollar is in trouble in Portuguese-speaking Brazil, but most other Latin American economies are tied closely to the dollar, either officially or in practice. Airfare specials to the region are plentiful right now, even though it is summer south of the equator. Hotel prices in most of Latin America have barely budged over the past few years. Once on the ground, US travelers will find their dollars going a long way, whether in Argentina, Peru, Costa Rica, or Mexico.

The Other Side of the World
As in Latin America, many currencies in Asia are closely linked to the dollar. The greenback has held steady in China, Thailand, Malaysia, Indonesia, India, and others. Bali is still one of the best deals on the planet and the Thai baht is still around the same level it has been for years.

Caribbean Deals
If you are in package tourist vacation mode, this region is looking better all the time. Throughout the area, local currencies have traditionally been tied to the US dollar and this trend is holding steady. Islands that have traditionally been comparative bargains, such as Jamaica and the Dominican Republic, are still solid values. More independent travelers should consider islands off the coast of Panama and Honduras. These laid-back destinations offer Caribbean waters with less crowds and lower prices. (For the really intrepid, check into the Corn Islands off Nicaragua.)

Go Against the Grain
For those willing to open up their horizons, there are plenty of other options. Tourism numbers in Egypt and Jordan have fallen off a cliff in the past few years and it’s a buyer’s market for hotels and tours. Turkey is by far the best value in Europe right now for Americans. In Africa, meanwhile, the US dollar is in trouble in the nation of South Africa, but is holding up fine in the safari destinations of Kenya and Tanzania.

Staying Close to Home
In the US, of course, exchange rates are a non-issue. As much as it pains me to say it, this might be a good time to stay on home soil if you are just looking at vacation options. In the past few years, airfares in the US have dropped for nearly every market. Package deals for warm places pop up almost every week. You can get a great hotel deal almost anywhere through Hotwire or Priceline. And sign up for a weekly airfare alert from SmarterTravel.com that will provide weekly flight specials from a home airport. Travelocity.com provides alerts for user-chosen routes–you just type in a route and what level fare to watch for.

  1. David law

    To the contrary, though the dollar may look weak against the pound, against the Japanese yen it this week went to a four-year high, and even relative weakness against the euro has gone into sharp reverse over the past two months.

  2. tim

    David–you’re half right anyway. The dollar is up against the yen. Here’s today’s Euro rate though:

    1.00 EUR = 1.36714 USD

    That’s close to an all-time low for the greenback.

  3. Mike


    I just ordered your book. With your experience, what destinations in South America or Central America, has the best exchange rates where I can live like a king, beaches, and most beautiful women who love americans?? I know, tall order right. Mike

  4. David

    The Dollar is finished, great time for an African Safari we would say!! Tanzania and Zanzibar charge mainly in Dollars and currently some establishments are setting their rates in EURO.

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