Sunday, October 19, 2008

Dollar's value finally up abroad

By Arthur Fromme

October 19, 2008

In the current economic gloom, there's a ray of travel-related sunshine: the increased strength of the U.S. dollar. Though no one can explain exactly why, the dollar has risen against every major foreign currency other than the Japanese yen, and it has increased substantially against some of them. Though the change in exchange rates hasn't been large enough to make a major difference in European travel, it has dramatically transformed the cost of visiting a number of other highly attractive destinations.

Australia comes first. As recently as six months ago, the Aussie dollar was traded almost at parity to the U.S. dollar. Suddenly, the U.S. dollar buys $1.40 to $1.50 Australian dollars (the rate varies from day to day), and Australia has become 40 percent to 50 percent cheaper to the American tourist. Hotel rates and restaurant costs "down under," sightseeing fees, clothing and souvenirs are today considerably below the price levels to which we're accustomed.

Mexico's currency has also weakened substantially against the U.S. dollar. A year ago, you received 10.50 pesos for one U.S. dollar; today, you receive between 12 and 13 pesos to the dollar. In a country so easily reached from all parts of the U.S.—in Acapulco and Puerto Vallarta, Cancun and Mazatlan, along the Mayan Riviera and the new Nayarit district—prices were always moderate even before the strengthening of the dollar, but now they're positively cheap. So the smart American traveler will dust off those travel plans and book a flight to this colorful country with its gracious, courteous people—and low, low costs.

Thailand presents a mixed picture. Its unit of currency, the baht, has recently been selling at a rate of 34 to the dollar (earlier, the rate was 28 to the dollar), and a country that was always low-priced to the traveler with U.S. dollars has become cheaper still. Unfortunately, there's considerable unrest in Thailand, culminating recently in street riots and some bloodshed. But the tourist has always traveled safely in this land of gentle Buddhist people. I would continue to recommend travel there and remain firm in my belief that the unrest will be short-lived.

The Island of Bali: Its currency, the Indonesian rupiah, has continued to decline against the U.S. dollar. A year ago, $1 bought 9,073 rupiah; it now buys nearly 10,000 rupiah, and an island that was always amazingly cheap has become cheaper still. Get there fast.

Iceland: No nation has had a worse economic crisis than Iceland, for reasons (bank failures) too complex to discuss. A year ago, you received 60 Iceland kronur for one U.S. dollar; today you receive roughly 110 Iceland kronur. Since the nation's cost-cutting airline, Icelandair, is also running unprecedented sales on airfares to Iceland, this is perhaps your best time ever for soaking in those thermal waters.

Canada: Just a few months ago, one U.S. dollar bought one Canadian dollar. Today one U.S. dollar buys almost $1.20 Canadian, and everything in Montreal, Toronto, Vancouver and the like costs about 20 percent less.

But while the currencies of Europe have weakened by about 10 percent against the U.S. dollar (as I write this, you only pay $1.72 for a British pound, $1.34 for a euro), the shift hasn't yet been great enough to substantially lower the cost of traveling in these pricey precincts.

Odd, isn't it? Just when most of us are beginning to feel impoverished, the cost of traveling to numerous foreign destinations has become much lower than before.

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