Every day, there are countless pressures on national currencies. Exchange rates are in constant flux, while supply and demand change the prices of a country’s goods and services. For those vacationing abroad, a sudden shift in the market can make big differences in how much money they can spend.
In 2014, the U.S. economy delivered a gift to its travelers: a strong dollar. Hitting its highest value in years, the dollar’s performance drove up U.S. exchange rates, decreasing international prices. While tourism costs followed the exchange rate down in most countries, some destinations stand out as especially good (or surprisingly bad) deals for Americans planning a vacation.
Better Deals Abroad:
Russia: Provided you know where to travel and how to get around safely, there is a great deal to be found in traveling Russia right now. International conflict and falling oil prices have crushed the ruble in currency markets over the past year, decreasing tourism costs by 30‐50 percent.
Romania/Bulgaria: As economic growth remains low in Eurozone countries, these countries have decreased their already low tourism costs over the past year. Many Americans do not realize that both these countries have extensive Black Sea coastlines that attract many vacationers.
Norway/Sweden: Although these Scandinavian countries are still some of the priciest destinations in Europe, both the krone and the krona have lost a considerable amount of strength over the past year. If you’ve been thinking about traveling to these countries, now might be the time.
Argentina: The disastrous bond default by the Argentine government has damaged the national economy and has upped the dollar’s exchange rate to the peso by about 50 percent. High consumer price inflation will limit how far these extra pesos go, but the overall effect is still cheaper tourism.
The Neighbors: The U.S. dollar made significant gains on both the Mexican peso and the Canadian dollar. Though neither country may feel particularly “foreign,” the money saved on short travel times can make them two of the easiest destinations for exploiting the strong U.S. dollar.
Countries Bucking the Trend:
China: Although it remains fairly cheap compared to the United States, China’s growth has outpaced the United States for decades, and its currency has grown in strength. China is no longer the bargain earlier travelers remember, and chances are good vacations there will only get more expensive.
Switzerland: Already a fixture on the list of most expensive places to visit, Switzerland threw off any dollar advantage in January when the Swiss Franc jumped in value after breaking ties with the Euro. Americans eager to see the Alps may wish to stay in the slightly more affordable Eurozone countries of France and Italy instead.
India: While the nominal exchange rate between the dollar and the Indian rupee remained relatively flat throughout the year, the country’s high inflation (over 5 percent annually) means your dollars will get you less. Much like China, India is still affordable in many areas, but its rapid growth likely means its cheapest days are behind it.
Alternative: See America First U.S. National Parks: Traveling around the United States won’t provide you with any currency advantage, but the recent drop in gas prices has
certainly made American road trips drastically cheaper than last year. The U.S. National Park Service protects 407 places of natural and historic significance and offers an annual pass for just $80.
The current strength of the dollar is a bonus for American travelers, but smart planning will always be the biggest factor to a successful vacation. Hunting for deals on airfare and choosing the best seasons to travel will have a bigger impact on the quality and price of a trip than any currency fluctuation. By taking time to detail your spending and itinerary, you can get the most out of any vacation.
Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser.
This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014 Advicent Solutions. All rights reserved.