Which countries around the world have a super-stable exchange rate or even use dollars as currency? More than a few, including some of the world’s cheapest destinations.
I’ve run this blog since 2003, so I’ve been through many currency fluctuations. Sometimes the U.S. dollar is worth a fortune for travelers going abroad, sometimes it’s worth a lot less. Over time things even out, but that doesn’t help you much if you’re heading to England at the wrong time or you’re British and heading the other direction.
Before this pandemic hit and determined where we could and could not go, I was often encouraging people to go to this place or that at the right time when the exchange rate is good. If you watch these things regularly and act on opportunities, you can often cut your vacation cost by 20% or more without lifting a finger. Just by having good timing.
Right now the U.S. dollar is strong, good for you if you’re coming from there, but the pound and Canadian dollar are both weak, so tougher times for them. If you’re European and traveling in Europe, it doesn’t matter much, since most countries there either use the euro or have a currency that’s closely tied to it. There are exceptions there though that don’t move in tandem and fortunately they are some of the cheapest places to travel in Europe.
What if worrying about this makes your head spin though and you don’t want to be bothered? Are there places that are going to cost roughly the same no matter when you go? Are there countries that use the US dollar or ones that have their own currency pegged to ours? Yes indeed, and it’s not a short list either.
If you looked at a chart like the one above for Ecuador or Panama, for example, it would be a straight line, like the heart machine reading of a dead man. Those countries use the greenback, so there’s never a fluctuation. In the Bahamas or Bermuda, they print their own money for show, but the value is always 1 to 1 with the U.S. dollar.
Others peg their own currency to the buck, so things stay stable. It’s part of the reason Belize and Costa Rica are more expensive than they should be. Since their currency doesn’t float, it’s usually valued artificially high, raising the cost of goods even when they’re produced locally.
Good or bad though, here’s where you can head off for next week, next year, or a decade from now and your costs won’t change much.
Countries With Currencies Pegged to the US Dollar
Learn the exchange rate when you arrive and then stop thinking about it in these travel destinations.
I’ve mentioned before that I really like the country, but Belize is not cheap. Almost everything is twice the price or more than you’ll find in neighboring Guatemala and you get a lot less for your money than you get in Mexico. That’s not because they’re some economic powerhouse though. It’s because the US dollar has been, and maybe always will be, worth 2 Belize dollars. They don’t have a dollar banknote though: it’s a coin.
They do print their own bills though, with a picture of the Queen, oddly enough. I’ve never quite figured this out since they were British Honduras at one point, but have been independent since 1981. So they have their own currency, with a picture of England’s queen, that’s tied to the U.S. dollar. Got it?
Lots of Caribbean Islands are Tied to the Dollar
These places aren’t cheap, but if you’re booking an island vacation that’s a short hop from the USA, it doesn’t matter which year you head to these tropical islands. Curacao, Bonaire, Saba, St. Eustatius, Saint Maarten, and Aruba have no fluctuation against the greenback.
Need more choices? Okay then: fly to Antigua, Dominica, St. Kitts, St. Lucia, St. Vincent and the Grenadines, Grenada, or Trinidad and Tobago.
In the Bahamas, off the coast of Florida, its 1 to 1 even, so you can avoid even changing money in a lot of places.
Currency in Cuba
Oddly enough for a country whose leaders have been fighting and criticizing the Yanquis for half a century, Cuba’s currency has been pegged at 25 to the dollar for the last 15 years or so. If you arrive as a foreigner though, they’ll take 10% off the top that goes straight to the government, muchas gracias. One of the reasons I still haven’t been there and don’t have any plans to visit.
Hong Kong, for Now
China is doing its best to destroy Hong Kong’s independence, free press, and individualism, so I’m not sure if the HK dollar will always be pegged to the U.S. one (usually 7.75 to 7.85), but for now it still is that way.
The Middle East Loves Dollars
It probably makes sense that a region getting most of its income from fossil fuel extraction would peg their currency to the U.S. dollar. The math gets rather difficult though. For $1 you get 1,507.50 Lebanese pounds, 0.35 Oman rial, or 3.673 UAE dirham.
Apparently nobody was into rounding. The only one that’s close to even is Saudi Arabia’s Riyal at 3.75.
For readers of The World’s Cheapest Destinations, Jordan is one of the dollar pegged countries too, at 0.71 Jordanian dinar to the dollar since the 1970s.
A Few Dollar Spots in Africa
You’ll have an easier time with euros than dollars in many parts of Africa, but Dijibouti and Eritrea peg local currencies with the U.S. dollar.
Dollars in the Stans
Mongolia. Kazakhstan, and Turkmenistan all have currencies that are pegged to the greenback.
Countries That Use Dollars as Currency
In some countries, the ease of travel goes beyond simple math. They don’t even bother to print their own currency. Some countries use dollars as currency, usually only minting their own coins to keep down the shipping costs. (So you’ll have a Balboa quarter in Panama that’s the same size as one in the USA but looks different.) Unlike the USA though, most of them have wisely eliminated the penny.
Panama Keeps the Dollar Rolling
Panama was once a de facto colony of the USA and the USA controlled the canal. We handed it back to them eventually though and now they control what it costs to cross the Panama Canal. They held onto the dollar though and it looks like that was a good decision. They have a stable economy, low inflation, and steadily rising incomes across the board.
They also have some of the best medical facilities in the Americas, at a much more affordable price than in the United States. It’s one of the reasons Americans like to retire in Panama or start a business there.
Ecuador Has a Dollar Economy
Ecuador switched to the U.S. dollar in 2000 to put a lid on inflation and it was worked very well. While neighboring countries frequently see large price swings, Ecuador rarely does except where the government is controlling rates, as with fuel subsidies. As with Panama, this makes Ecuador a good place to retire and buy real estate. The Ecuador cost of living is low and it’s relatively easy to get long-term residency.
El Salvador Uses El Dollar
Despite America’s contribution to the Cold War mess made in El Salvador last century, the government adopted the greenback as their own in 2001. After that, the colon died out and disappeared.
The prevailing wisdom is that they did this to bring down interest rates but more importantly because 20% of the nation’s economy then was from remittances from Salvadoran expats living abroad. It’s probably still a big part of the economy now and the side effect has been a lower inflation rate–though of course they’ve lost all control over monetary policy as a trade-off.
Oddball Dollar Countries
What do Zimbabwe, Palau, and Timor-Leste have in common? A recent history of using the U.S. dollar as their currency.
In Zimbabwe it was a Hail Mary pass to avert an emergency. When your inflation rate tops 1,000% and people are bringing wheelbarrows to the bank to carry out their near-worthless money, it’s time to stop the bleeding any way you can.
It was the de facto official currency between 2009 and 2019, but then like a nasty breakup after a decade-long relationship, the government suddenly outlawed using it in transactions and introduced a new version of its own currency. That currency then declined in value immediately and soon lost half its value. A year later, the dollar’s use in transactions was okay again, under cover of helping people affected by the pandemic. In the future, who knows.
Dollars in the US Territories
There are a group of “in between” islands that are not U.S. states with full voting rights, but are U.S. territories that use the dollar as their official currency. These include nearby Puerto Rico, which Americans can fly to without a passport, the U.S. Virgin Islands, and far-flung islands like American Samoa, Guam, and Saipan. The Marshall Islands are also part of this arrangement.
Changes on the Currency Peg Front
It’s a mystery to nearly everyone why Costa Rica is so expensive for travelers compared to neighboring Panama and Nicaragua. Some people drive hours to the border when they want to go booze shopping. Ticas and expats alike will vacation elsewhere in Central America to get a better bang for their buck.
Some blame it on expats and tourists driving up the real estate and construction costs, but a bigger factor is a currency that has traditionally been tied tightly to the greenback, rarely moving beyond a range of 500 to 550. For reasons that I haven’t looked into yet, that started to crack during the pandemic. Today as I write this you get 625 Costa Rican colon to the dollar, so it’s a good time to visit!
In Cambodia, you’ll need local currency to shop in the market or pay a tuk-tuk driver for a short ride, but almost all other transactions have been in U.S. dollars. This has even been true in the supermarkets, where the prices are not even posted in the local currency. (A logical move since they need a lot fewer zeros that way.)
The chatter is that this started to change somewhat during the pandemic, however, with smaller bills disappearing and more change doled out in the local riels currency, which officially trades in a narrow range between 4,000 and 4,100 to the dollar. Assume you’ll still use dollars freely in tourist areas when the country opens up fully again, not so much in others.
Vietnam is often listed as a country that has a currency pegged to the dollar, but in reality there’s a good bit of fluctuation there if you look at the history. It’s been relatively stable the past few years though, the dong trading between 22,600 and 23,600 to the dollar–a minor difference in percentage terms. The cost of living in Vietnam is low if you stay and you don’t have to worry much about what you can get for your dollars if you’re a traveler.