Traveling abroad? Here's where to stretch your dollars
By TIM LEFFEL
Published January 11, 2004
Superpower or not, this nation's currency has been shrinking in value for months, and few experts see a dollar turnaround soon. If you are planning to head abroad, however, you can still find a bargain if you pick your destination wisely.
First, a little history: In 2001, you could buy one euro, the common currency of more than a dozen western European nations, for 90 U.S. cents; at the beginning of 2004, it took about $1.27. That decline in value of more than a third affects every purchase you would make in those countries, including hotel rooms, taxis, meals, museum admissions and drinks.
The United Kingdom, which does not use the euro but rather the equally strong pound sterling, and Europe already were some of the most expensive destinations in the world. The dollar's decline means they are even pricier. And the dollar's decline against the Japanese yen has boosted the already high prices in that nation.
Canada, a dependable bargain for neighboring Americans, is now about 20 percent more expensive than it was two years ago against the U.S. dollar. Australia and New Zealand have also become far more expensive.
Fortunately, many countries have currencies that are pegged to float so that their value stays at a constant exchange rate to the dollar. As a result, travel costs in many of these Asian and Latin American countries are the same or sometimes less than they were two years ago.
Nations such as China and Malaysia trade at an official parity with the U.S. dollar. The governments of still other nations, including India and Thailand, often intervene to keep their dollar-exchange rate steady. Consequently, U.S. citizens visiting nearly any place in Southeast Asia or the Indian subcontinent will still find their money going a long way.
Closer to home, most countries in the Caribbean, Central America and South America are tied closely to the dollar, either as a trading partner or by pegging their currency's value directly to the dollar.
Panama and Ecuador actually use the U.S. dollar as their currency.
And nations such as Belize, Barbados and Bermuda hold rates in a narrow band. The only significant Latin American decline in the dollar has been in Chile.
So where is the best deal in Latin America right now? Look to Mexico, Honduras or Argentina. The Mexican peso is down about 20 percent against the dollar from two years ago, while the Honduran currency is down about 12 percent. Argentina has had a host of problems and its currency is worth one-third of what it was in 2001.
These countries are all far cheaper than Western Europe and now are some of the best values for traveling Americans.
- Tim Leffel is author of "The World's Cheapest Destinations: 21 Countries Where Your Dollars Are Worth a Fortune."
