Tim Leffel's Cheapest Destinations

Where is the U.S. Dollar Still Strong in ‘08?

It’s kind of unnerving when I pull up stats for this blog and find that some of the most popular posts are four or five years old. While it’s nice that old rants have staying power in the search engines, it’s not so good when the info is really out of date and reality has changed.

That’s the case with this 2003 post of mine, Where is the U.S. dollar still strong? OK, the cheapest places are still the cheapest mostly, in relative terms, but the equations have changed considerably. It would have been hard to believe then, but the euro equaling $1.20—as it did in 2003–was fantastic compared to the $1.59 it commands now. Who would have imagined then that the Canadian dollar would be trading at parity with the U.S. one? But the dumbest 51 percent of our population reelected the same doofus that was already running things into the ground and here we are.

Some of the cheapest places then aren’t nearly as cheap now either. Take the Czech Republic. I was just there last autumn at the rate of 19 crowns to the dollar and prices were still reasonable. Now it’s already down to 15, which is half the level of five years ago. Here’s the ugly chart, courtesy of fxtop.com.

That’s Europe in general, actually, whether you’re talking about France, Norway, Romania, or Hungary. Oddly enough, the main exception is Great Britain, where the pound/dollar rate has been flat for over a year at 2 pounds/1 dollar. No, London’s not a bargain, but at least it’s not getting worse every month.

Asia has been more stable, but it’s still more expensive here and there. The dollar was in freefall against the Thai baht for a while, but it is now about where it was when I first went there—in 1993. India’s exchange rate is only a little below where it was in 2003 (now 42 rupees to the dollar, the same as my visit in 1998), though that doesn’t tell the whole story: inflation is now running at 11 percent and there aren’t nearly enough hotel rooms for the surge in visitors. There has been a decline in Laos, Malaysia, and Nepal, but we’re up since ‘03 in Vietnam and Indonesia.

A lot of Middle Eastern currencies are pegged to the dollar, so there’s little change in Jordan, Syria, or Dubai, for instance. This is not the case in Egypt though, where the buck has gone from 6.3 Egyptian pounds to 5.3. It’s even worse in Israel—down 10 percent this year alone.

South Africa is a bright spot where the dollar has appreciated 10 percent this year, but it’s not all that cheap anyway. Morocco’s chart, however, looks a lot like that Czech one above—ugly. Maybe I need to add Malawi to the next edition of The World’s Cheapest Destinations. The dollar fetched 92 of their kwachas in ‘03, but now a dollar gets 140.

I’ve said it a hundred times before though and will probably say it a hundred times again. If you are traveling with U.S. dollars, your best bet is to head south to Latin America, especially non-resort Mexico and Central America. The picture isn’t as simple as it was five years ago in South America: rampant inflation in Argentina, a roaring Brazilian economy, a rise in tourist prices for Peru, and an appreciation in Chile’s commodity-based currency. Overall though, there’s less currency fluctuation in the Americas than there is elsewhere.

Panama and Ecuador use the U.S. dollar. The exchange rate with Belize never budges. In Mexico the dollar trades in a narrow band between 10.2 and 11. The rates in Guatemala and Honduras have been flat for years. And these places are all quite cheap compared to traveling in Canada or the U.S.

It’s not all about exchange rates of course, and fuel prices are wreaking havoc on every presumption around the world. Bus rides and meals are going to go up everywhere, no matter what kind of money you’re carrying. But if you’re going to a cheap place that’s likely to stay relatively cheap, it’s much easier to budget and live large without breaking the bank.

If you live in Europe and have been getting paid in euros, forget all of this and just remember one message: go traveling!! What are you sitting at home for? An out-of-whack currency valuation like this comes along every 15 or 20 years—don’t blow it!

[Like what you see here? Subscribe to the Cheapest Destinations blog.]

Related posts:

1. Fun While It Lasted – a Strong Travel Dollar
2. How the Travel Dollar Fared Last Year
3. The State of the Travel Dollar, Summer 2009
4. Don’t Look Now–Your Dollar is Rising
5. Where Your Travel Dollars Are Still Worth Something