The U.S. dollar has been strong in 2015 and the market believes it will continue to remain so, at least until the end of this year. That means this summer’s trip abroad is more affordable than in years past. Why not take advantage of it? Here are some of the biggest bargains from a currency standpoint:
- Brazil: The biggest currency losers are the oil-exporting nations, and the Brazilian real is one of them, weakening about 30% in the past year. Its economy is suffering with high inflation and slowing growth. It’s cheaper today and will remain so as long as oil prices are depressed. So if you can’t make it this year, you might still find a great deal for next year’s Rio Carnival.
- New Zealand: The New Zealand dollar has depreciated by 22% from this time in 2014, with the Reserve Bank of New Zealand (RBNZ) cutting interest rates recently in a surprise move. Just 15 months ago, the RBNZ had raised rates because of its overheated property markets, but Gov. Graeme Wheeler soon realized that New Zealand could not hit its inflation target at those interest rate levels. The market expects more cuts to come and so the New Zealand dollar is falling in anticipation. It is now trading about 7% cheaper than its neighbor currency, the Australian dollar.
- Japan: A currency that is starting to show signs of bottoming out would be the Japanese yen. This has already fallen by 40% since Prime Minister Shinzo Abe took office in late 2012, and it’s already below its purchasing power parity level. So if you have always wanted to go to Japan, it’s a great time to do it. As a side note, there is no concept of tipping in Japan and the quality of food, security and comfort is very high. It’s no wonder that the country is flooded with tourists from China today.
- Eurozone (minus Greece): Last but not least, the euro is about 20% cheaper than a year ago, and so now those Gucci and Louis Vuitton purses are more affordable. Be sure you claim your value-added tax (VAT) back too. The only eurozone country that I would avoid now is Greece. Its banking system is facing great challenges, and if the Greek drachma should return, it will be at least 50% cheaper than it is today, so you’re better off waiting.
My View: If you are a bargain hunter, it is certainly worth considering exchange rates when you choose your next vacation spot. You will get more bang for your travel buck.
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