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Saturday, October 25th, 2014


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World Travel: Long Days, Short Dollars

Like many things in life, travel is all about the timing.  Shifting economies across the globe can have a major impact on the cost of your trip, so if you’re working with a tight budget, you’re definitely going to want to keep an eye on exchange rates so you’ll know when, and where to travel.  The U.S. dollar has been on a shrinking-spree in recent years, which means the good old green back won’t take budget-minded travelers as far as it used to.  But that doesn’t mean your next big adventure has to break the bank, it just means you have to stay one step ahead of the global financial trends.

Knowing the current exchange rates can be helpful, but they don’t tell the whole story of how much you can actually buy with your dollar.  The actual cost of goods and services in a country depends on a lot of factors, and it all comes down to an equation better left in the notebooks of economists and statisticians.

A more practical way of determining the purchasing power of a currency is to use The Economist’s Big Mac Index, or CommSec’s iPod Index which basically lists the prices of these items in various countries.  These prices are then converted into U.S. dollars with current exchange rates.   Because of the ubiquity of these items, and the stability of production costs across the board, these lists are useful in assessing how much your dollar is actually worth.

But don’t let all these complicated Econ 101 formulas turn you into an armchair traveler.  Check out some of these sweet destinations where you can still get your share of adventure and culture without completely ravaging your bank account.

Switzerland

In the land of the Euro, the Swiss Franc used to be king.  These days, with a waning dollar and a waxing Euro, Switzerland is more affordable than ever.  Last year, CommSec’s iPod index listed a 2 gigabyte Nano at $175.59 in Switzerland, compared to $192.46 in Germany and $205.80 in France, which both use the Euro.  This price translates across the board, from the price of a Coke to the price of a car, and for travelers that means that this formerly expensive country can sometimes be more affordable than its Euro-mongering neighbors.

It wouldn’t be fair to say that Switzerland is a cheap place to travel, but it is at least within the means of the common backpacker.  Combine these savings with the cheese, the chocolate, the knives, the awesome Alps (literally, you’ll be in awe), the nightlife of big city Zurich, and the extreme sports heaven of Interlaken, and you can’t go wrong with a stop in Switzerland.

Exchange rate: 1 CHF = 0.914128 USD

One night in a hostel in Interlaken: $26

Australia

In October of last year, the Australian dollar rose to a 23-year high against the U.S. dollar, and it has only dropped slightly since then.  Still, Australia remains a relatively affordable place for American travelers, with prices similar to those found here in the states.  Current exchange rates list the Aussie Dollar as slightly weaker than the U.S. dollar.  The Economist’s Big Mac Index lists the price of McDonald’s ubiquitous burger as $2.95 in Australia, compared to $3.41 here in the states.  So if you’re a fast food junkie, you’ll be McLovin’ it down under. 

But the price of a burger isn’t all that Terra Australis has to offer.  Check out the iconic Sydney Opera House, snorkel the Great Barrier Reef, or hitchhike through the outback and you’ll be enjoying the Aussie experience so much, you won’t have time to worry about your finances.  

Exchange rate: 1.00 AUD = 0.912858 USD

One night in a hostel in Sydney: $23

Mexico

Mexico has long had an exchange rate favorable to Americans looking for a sunny vacation south of the border. Even the high-end tourist resorts are affordable to many travelers, and those looking for a more local and authentic Mexican travel experience won’t have a hard time finding cheap digs and great food at great prices.  From the pacific coast to the Yucatan peninsula, you’ll find beaches, jungles, and Mayan archaeological sites, well worth visiting at any price.

Exchange rate: 1.00 MXN = 0.0930016 USD

One night in a hostel in Monterey: $13

South Korea

The currency of South Korea is the Won, and the current exchange rate gives you about 945 Won for one U.S. dollar. But that doesn’t mean that your dollar is almost one thousand times stronger in South Korea than at home.  In reality, South Korea is relatively expensive compared to some of its neighbors.  Neighboring China tends to be a cheaper place to travel, while Japan tends to be a bit more expensive. 

Many Americans flock to South Korea for the teaching jobs, which are still readily available for native English speakers with a college degree.  The decent salary, combined with the moderate cost of living, make Korea an attractive option for many aspiring expats.  And with local delicious Korean Barbecues and the popular karaoke bars, you can be sure you’ll have a good time.

Exchange rate: 1.00 KRW = 0.00105795 USD

One night in a hostel in Seoul: $18

Turkey

Since the Economic crisis of 2001, Turkey has been battling inflation.  Just a few years ago, it was much cheaper to travel and live in Turkey, than it is now, but you can still find some great deals, and see some amazing sights without completely breaking your budget. Remember, Turkey is a country that loves to bargain, so you can usually get a good price once you’ve honed your haggling skills. Backpackers will find friendly and cheap network of buses and hostels all over Turkey, making travel simple and affordable from the Grand Bazaar of Istanbul to the stunning landscapes of Cappadocia.

Exchange rate: 1.19585 TRY = 1.00 USD

One night in a hostel in Istanbul: $15

Argentina

Like much of South America, Argentina is a great place for budget-savvy backpackers.  But this wasn’t always the case.  Back in the early 90′s, The Argentine Peso was on par with the U.S. dollar.  Near the end of 2001, after a bit of over-borrowing and some questionable investing, Argentina had to default on their foreign debt.  So, what does this little economic history lesson mean to you?  Well, it means that instead of being one to one with the dollar, now the Argentine Peso is about three to one–that is, your American dollar has about triple the buying power in Argentina.

So if you’re a budget backpacker with a taste for the finer things in life, you’re going to enjoy the prices at the Argentine steak houses, famous for their choice beef.  And if you’re a shop-happy bargain hunter, you’ll love the high fashions at low prices in Buenos Aires.

Even if you don’t want to shop, or eat beef, you can be sure you’ll have a good time in Argentina, year-round.  Try hitting the ski slopes in the Andes at Las Leñas and San Carlos de Bariloche or get some serious beach time at Mar del Plata.

Exchange rate: 1.00 ARS = 0.317157 USD

One night in a hostel in Buenos Aires: $10.60

Canada

Our friendly neighbor to the north has a lot to offer any traveler willing to cross its frosty borders. Travelers can explore the bustling city of Vancouver on the West Coast and French-speaking Montreal in the east, or even the farthest reaches of the Yukon in the north.  The appeal of these modern and diverse cities, paired with massive forests and natural wonders, makes Canada a worthwhile destination, regardless of price. 

Back in the mid 90s they even sweetened the deal with a super-favorable exchange rate.  Back then, you could buy one Canadian Dollar for about 66 cents. In late 2007, the Canadian dollar made some major moves and peaked at around USD $1.10 before settling in at about even with the U.S. dollar.

With pricing almost equal to that of the United States, Canada may not be a budget traveler’s paradise, but when you consider what it has to offer as a destination, and its accessibility to American travelers, its well worth the trip north.

Exchange rate: 1.00 CAD = 0.992784 USD

One night in a hostel in Montreal: $25

Hong Kong

At the current exchange rate, one Hong Kong dollar is only worth about 13 cents U.S.  CommSec’s iPod Index puts Hong Kong near the bottom of the list at $147.35, a slightly cheaper price than we’d get at home, and a great deal compared to the $213.03 you’d pay in Sweden for the same product.

What does all this mean?  You guessed it, whether you’re in the mood for Cantonese, Chiuchow, or Sichuan, you’re going to get a good deal.  Additionally, you’ll have fun exploring the bustling city-life on Hong Kong Island, or relaxing an one of Hong Kong’s many beaches. Just be sure not to miss out on the Dim Sum!

Exchange rate: 1.00 HKD = 0.128191 USD

One night in a hostel in Hong Kong: $15

Thailand

Local Thai venders are pros when it comes to haggling, so even with the exchange rate resting comfortably at over 31 Baht for one U.S. dollar, you can find yourself paying Western prices in this South East Asian gem-so bring your bargaining shoes.  Once you get the hang of the hagglers, you can travel in style while still saving money.  You can often get accommodation at great prices-we’re talking resort-style hostels practically on the beach for less than $10 a day!

At these prices, almost anyone can live like a king in Thailand, and you’ve got tasty, authentic Thai food, tropical weather, and some of the most beautiful beaches in the world. So what are you waiting for?

Exchange rate: 31.6350 THB = 1.00 USD

One night in a hostel in Phuket: $10

Justin Jones is probably doing something awesome in a foreign country, and figuring out how not to pay for it.  Find out more at JustinWasHere.com.

© 2008, Young Money Media, LLC. All rights reserved.

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2 Responses to World Travel: Long Days, Short Dollars

  1. Pingback: Paradise for Pesos: Colombia, South America

  2. Palani says:

    The spot and forward exhgcnae rates are related to each other through the interest rate parity. In other words, the difference between the spot and forward rates is the interest rate differential between two currencies.Forward rates are used to hedge foreign exhgcnae exposure risk.

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