Coping with a Weak Dollar Abroad

Explore Non-European Destinations for Budget Travel

By Tim Leffel

Although many travelers are blissfully unaware of what’s happening in the world of international commerce, worldwide exchange rate trends directly impact our travel budget. Due to a weak U.S. economy, low interest rates, and a soaring government deficit, the dollar is at a historic low point against the euro. No matter how you look at it, this is not the best time to be a budget traveler in Western Europe.

Our dollars now buy 25 percent less than they did two years ago in all the EU countries. Two years ago, 90 U.S. cents would get you one euro; now it takes $1.17. And it takes $1.66 to buy one pound sterling in the U.K. That's great news for Europeans coming to the U.S. or Canada but lousy news for anyone going the other way. What was already an expensive part of the world has become even pricier.

This kind of dramatic change can easily break your budget. Here are some tips on coping with the euro/dollar exchange problem.

Visit "The Other Europe"

While the Czech Republic has already closely matched euro exchange rates, other countries still waiting to become part of the EU have not. The dollar is only down about 10 percent from two years ago in Hungary, Poland, Romania, and Latvia, while it’s actually up in Romania, Belarus, and Turkey. Some of this increase has been eaten up by inflation, but these countries are all far cheaper than their more developed neighbors to the west. You can eat, sleep, and travel comfortably in Eastern Europe and Turkey for half or less what you’d spend in the EU countries. You’ll have fewer tour bus groups to avoid as well.

Head to Asia

Many Asian currencies are tied to the dollar, so there has been little effect in this part of the world. Rates in popular backpacker destinations on the Indian subcontinent and in Southeast Asia have generally remained the same. The Thai baht and Indonesian rupiah have declined around 10 percent, while a buck will now get you about 50 percent more sacks of Laos kip, at 10,545 to the dollar.

Since the SARS epidemic broke out, Asia has seen a dramatic drop in tourism. Anyone deciding to visit or live in these countries will have no problem finding historic deals on airfares, lodging, and local tours.

Go South of the Border

Most countries in Central America and South America are tied closely to the U.S., either as a trading partner or a currency peg. The exchange rate decrease against the Euro has been a non-issue here, with a large number of currencies tied to the dollar. Rates are roughly the same as two years ago in Belize, Guatemala, Ecuador, and Peru. The dollar has actually increased during that time against the currencies of Mexico (up 13 percent), Honduras (up 11 percent), and Brazil (up 17 percent). Again, these countries are all far cheaper than Western Europe and some are among the best values on the planet.

Feel Like You’re in Europe

The most European city outside of Europe is arguably Buenos Aires, Argentina. Thanks to a complete meltdown in the country’s currency, this enchanting and romantic city is cheaper than it has been in a lifetime for those with foreign currency. You can experience old world architecture, get your fill of cultural entertainment, and idle away your hours in sidewalk cafés for a fraction of what you’d spend for the same experience in Europe.

After all, Argentina takes the prize for the biggest currency drop in the past two years. Your U.S. or Canadian dollars are worth nearly three times what they were two years ago.

If you’re American, a trip to Quebec is another "feels like Europe" option. Canada is still a great bargain for Americans, and you’ll definitely feel like you’re in a foreign country.

TIM LEFFEL, a regular columnist for Transitions Abroad Magazine, is the author of Make Your Travel Dollars Worth a Fortune: The Contrarian Traveler’s Guide to Getting More for Less and The World’s Cheapest Destinations. He is also editor of PerceptiveTravel.com, featuring narratives from some of the best wandering authors on the planet.

Click on the covers below for more on Tim Leffel's travel books.