The Evolving Value of a Travel Dollar

Frida Mexican money

Don’t look now, but you just got a little richer. There’s just one catch: you have to go traveling.

Trying to explain why the U.S. dollar is going up or down is something even experienced economists have trouble with, so I won’t bother trying. Just know that it involves the perception of our economy’s health, the relative strength of other economies’ health (especially Europe and China), and what’s going on with the corresponding economy of the currency it’s trading against.

The bottom line is, we’re in a golden period right now where the dollar is relatively strong, which is good news for travelers. It takes a little sting out of the most expensive places and makes the cheaper ones even cheaper.

Here are a few key places where you’re better off now than you were a year or two ago.

Argentina

I discussed this one in detail already recently, so go check out my cheap Argentina post. Today the “blue rate” is 14.7 to the dollar, compared to under 9 for the official rate. Take lots of cash.

living in Salta

Mexico

I arrived at the Guadalajara airport a few nights ago and laughed as I saw the exchange booth giving a rate of 10.9 pesos to the dollar. I walked over to an ATM and got 13.4 to the dollar. This is a great time to be in Mexico, but unlike in Argentina, don’t come with a briefcase full of cash. There are exchange restrictions and in most areas you’ll get a worse rate than just taking money out of your own bank account with a debit card. If you can find a CI Banco machine, they have the lowest fees. BanNorte has the highest.

Thailand

This country has been a political mess for a while and that is (probably temporarily) pushing down the value of their currency. Right now the official rate is 32.4, which is 10% better than where it was in late 2012. Avoid the protest zones in Bangkok and enjoy.

Thailand travel

Hungary

The first time I went to Hungary the exchange rate was around 215 forint to the dollar, the second time it was around 240. That approximate 10% move made a significant difference in how cheap it felt for a beer, a meal, or a locally priced hotel. It’s back up to that point again, so this is a good time to spend a few days in Budapest and then hit the countryside.

Peru

This time two years ago a U.S. dollar got you 2.6 new soles. Now you get 2.9. Peru can be an expensive place if you go during high season and you’re on the tourist trail shared by people with loads of money checking something off a bucket list. Take a side trail though or go between October and April and your soles will go a long way.

Peru travel

Chile

This is not one of The World’s Cheapest Destinations by any means, but when I wrote this post about how expensive Chile was when I was there two years ago, a dollar got you 480 Chilean pesos. Now a dollar gets you 590. That’s a 23% increase in purchasing power. It’s still going to be more expensive than it’s neighbors, but it won’t feel so out of whack as before.

Other Countries

The swings are less than 10% in the following in 2014, but right now the dollar is at or near a two-year high in Canada, Brazil, Colombia, Nicaragua, Morocco, Australia, New Zealand, Indonesia, Laos, Vietnam, Philippines, Singapore, Taiwan, Bulgaria, the Czech Republic, Romania, Turkey, and Egypt. I expect you’ll see most of Africa’s currencies plunge in the next few months because of the ebola effect, even if they’re 2,000 miles away from the outbreak.

If you’re a traveler and you want to keep up with exchange rates, there’s an app for that. I use one called Exchange Rates on my Android phone and one called Currency App on my iPod Touch. In either you can set up which currencies to follow and it’ll update when you refresh.

Comments
  1. GH

    One man’s loss is another’s gain or one human’s loss is another’s gain — but Americans traveling on a budget were due for a reversal of fortune, especially vis a vis the Euro.

    But Europe prepares for a possible triple-dip recession, which could cause our stock market to fall (it has already) and potentially reverse the effect in ways only currency exchange speculators understand.

    I guess you have to move fast and travel slow if you want to enjoy changes in currency rates that some are fortunate never to be concerned about.

  2. Tim Leffel

    True, but the US stock market has been going gangbusters for years now. Anyone who invested in index funds in 2008 or 2009 has more than doubled their money. You can’t have a run like that go on forever. Maybe it’s time to shift money to Europe or Latin America and then sit back and wait for their surge.

    But yes, act fast and travel slow is a good strategy. There are always good arbitrage opportunities in the travel world if you’re paying attention and can spend outside the dollar-priced tourist path for weeks or months.

  3. Wayne Bernhardson

    Tim, I will add that in Chile, BancoEstado ATMs do not collect a service fee on foreign cards, while other banks charge up to US$5-6. At BancoEstado, though, your card must have a MasterCard logo on it. For more detail, see http://tinyurl.com/nm4ubt3

  4. Jeff Holden

    This is something which has been mystery for years however traders contently find a way to make money from this. It just requires an eye for foreign exchange. I find myself looking for the best exchange rate weeks in advance to get the best deal. Ive found that using foreign exchange brokers online are way cheaper. You can compare all their fees/ rates online at sendthatcash.com
    Worth a try if you’re looking to save some money.

  5. DiffPaul

    In Thailand right now and there are noticable cost differences between Bangkok & Resort Islands, and northern Thailand.

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