NerdWallet: A strong U.S. dollar abroad can take some of the sting off rising travel costs

by | Jun 27, 2022 | Stock Market

This article is reprinted by permission from NerdWallet.  Believe it or not, the U.S. dollar
has strengthened against many foreign currencies this year. Yes, the dollar has lost purchasing power in the face of inflation but has actually gained ground relative to other currencies. The upshot: Summer travelers heading overseas could enjoy a discount on everything from hotel rooms to croissants.

The caveats: The exchange rate is much better in some countries than in others. And global inflationary pressures are still driving up prices overall. If you’re still deciding where (and whether) to travel this summer, the strength of the dollar could be a deciding factor.The dipping euro The dollar was 11% stronger against the euro
in April 2022 compared with April 2021, according to data from the Federal Reserve. The two currencies have been flirting with 1:1 parity, which hasn’t happened since the early 2000s. For the past 20 years, a dollar has been worth less than a euro. Besides avoiding the headache of calculating the dollar cost of a 300-euro train ticket (it’s now about $300), this parity can make a big impact on European vacation budgets. Spending in countries that use the euro will be cheaper, in relative terms, than it has been in a long time. Assuming exchange rates remain steady throughout the summer, this could mean hundreds of dollars in relative savings. They’re “relative” because the absolute prices of expenses such as food and transportation will remain affected by global inflation. Read: Cases climb in Southeast Asia and Europe in latest week as BA.4 and BA.5 subvariants take holdSome changes are bigger than others The U.S. dollar is strong against many foreign currencies this year, but not all. Converting dollars to Japanese yen
yielded 16% better results in April than the year prior, but the Mexican peso and Canadian dollar have remained relatively flat.

Before packing your bags for Tokyo, remember that Japan is still restricting foreign visitors. As of June 10, 2022, people from certain countries — including the U.S. — can visit Japan as part of a package tour. Independent travelers are not yet welcome. Also see: Fourth of July travel: A record 42 million people ex …

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