International travel just became cheaper(Read article summary)
The US dollar's exchange rates with international currencies have improved in the last eight months. This means food, transportation costs, and other expenses will cost you less when visiting some popular destinations across the globe.
Traveling to another country may be a dream you’ve kept putting off because it’s expensive. Well, here’s some good news for you: it’s a little bit cheaper now, so consider packing your bags soon.
“Based on the recent drop across several exchange rates, now is better than ever to travel abroad as an American,” Christopher P. de Lorimier writes in an email. De Lorimier is an investment advisor representative for O’Connor Wealth Management in Pasadena, California.
That means entry fees, transportation costs and other expenses will cost you less than they would have last year. Let’s take a closer look at some popular destinations.
The largest gap between the euro (€) and U.S. dollar in the past 10 years was €0.628 to $1 in April 2008, but this year the two had a closer rate of €0.861 per $1 on January 21, an overall value increase for the dollar of 37.1%.
But even traveling now compared to last year is cheaper. From last May alone, the dollar increased its value 19.9%, based on Bloomberg data. For example, buying a ticket to the top of the Eiffel Tower, which is currently €15.5, will cost you $17.93 instead of $21.56. A four-day Eurail train pass between France and Italy at €300 will cost $347.10 instead of $417.30, last May’s price. That’s a savings of $70.
If you want to travel Down Under instead, the Australian dollar (AU$) rate is also in your favor. Since last July, the U.S. dollar has increased its value by 17.3% so that AU$1.235 equated to US$1, as of January 21, based on Bloomberg data. A walking tour of the Sydney Opera House, priced at AU$37, is now US$29.93 instead of US$35.11, as it was last summer. Plus, the bigger the expense, the more you can save with this current exchange rate.
Following a more extreme downward trajectory than the Australian dollar, the Canadian dollar (CA$) has fallen to a more than five-year low, so the rate was CA$1.234 to US$1 on January 21 based on Bloomberg data. This trend has been attributed to falling prices for its largest export, crude oil, and an employment rate that is far from robust.
However, iIf you’re close to the Canadian border in America, you can save even more on your transportation costs. The average price of gas in the U.S. right now is $2.32 per gallon, according to the U.S. Energy Information Administration. This is the lowest price since 2010, and is one of the cheapest rates internationally too.
Once you make it over to Canada, the price of gas is in decline there too. Traditionally, though, Canadian gas is more expensive than American petrol, so US$4 a gallon up north is actually a deal.
Outside of the Western world, Japan’s rate for the yen (¥) against the dollar is also more favorable this year. If you take a trip, a five-day tourist pass for the Shinkansen, or “bullet train,” between Tokyo and Kyoto, for example, costs ¥35,000. Last February this meant $346.50, but thanks to the recent rate change, it comes to $297.50 — a savings of just under $50.
The rate last February was at a low of ¥100.98 to the dollar, but the dollar increased in value by 16.9%, so the rate this January 21 was ¥117.97 to the dollar, based on Bloombergdata.
In sum, a $20 American bill now comes to €17.26 in Europe, AU$24.72 in Australia, CA$24.66 in Canada and ¥2,359.40 in Japan. Of the four, the rate against the euro has seen the most positive change in the past year. A trip to Europe, then, is the most cost-effective in terms of exchange rate changes alone, but remember that these aren’t fixed rates.
De Lorimier explains, “Being aware of the overall changes to exchange rates (and the direction they are moving) can allow you to save a great deal of money while having the chance to travel.” Granted, you’ll also want to be careful about how you exchange your money because some ways carry heavier fees than others.
Two of the best approaches involve plastic. Bringing a no foreign transaction fee credit cardon your trip will save you an extra 3% on every dollar spent abroad, and a no-fee debit card will not charge you international ATM fees or foreign transaction fees.
As this is the time of year to make resolutions, make the leap and plan for your dream vacation abroad while the rates stay in your favor.
The post Currency Shifts Give You More Bang for Your Buck Abroad appeared first on NerdWallet News.