My wife and I just got back from a week in Ireland. We went over for a friend’s wedding and had a great time. It was our second trip over – we went back in 2012, again for another wedding – and the most surprising thing between the trips was the cost. It cost us much less this time around than last time.
You might be thinking that we stayed in lower priced hotels or didn’t rent a car this time. While we did stay with friends for one of the nights, the reason for the lower cost was the strong US Dollar. And because of the strong US Dollar, now is the time to travel.
How Currency Works
Here is a quick background into currency exchange rates to help you understand things. Currencies play off of one another and affect the price consumers and businesses pay for goods and services. In some cases, a strong currency is ideal and in other times, a weak currency is ideal.
For example, since the US Dollar is strong against the Euro, this causes prices for European goods and services to be cheaper for us here in the US. On the other hand, it causes prices of US goods and services for Europeans to be more expensive. So, for us to travel to Ireland it was cheap. But if an Irish person were to come to the US, it would be expensive for them.
Back in 2012, when we first traveled over to Ireland, the exchange rate was $1 USD to €1.35 Euro. This means that the same item in the US that costs $1 will cost you an extra $0.35 in Ireland. This doesn’t sound big, but when you look at hotels, which range around €200 Euro, that is an extra $70 per night or $500 for a weeklong vacation.
Right now, the exchange rate is $1 USD to €1.08 Euro. That same hotel will cost an extra $16 per night or $100 for the week. Much more reasonable.
Why The Strength of The Dollar
There are a handful of reasons for the strength of the US Dollar right now. I am not going to detail all of them, but will highlight two main factors:
- First, the US economy is growing faster than most international economies. This causes foreign investors to invest their money in the US to get a higher rate of return.
- Second, the drop in oil prices have hurt many countries that rely on exporting oil as their main source of revenue. Since they are making less money from exports, the value of their currency drops as well as the growth of the economy slows down.
Where To Travel
So, you know that the Euro is “weak” right now. This means that any place you go that uses the Euro as currency will be cheap in comparison to years before. This includes expensive cities like Paris. But there is on caveat – don’t just assume prices are low. As the weather gets warmer, peak travel season hits and this might cause a brief spike in prices.
If you want to get the best deal, book a trip for the offseason later this year. Just be sure to book the big expenses now, like car rental and hotels, so you can take advantage of the weak Euro.
Other places to look into for cheap travel include Russia, Argentina, Poland, Sweden, and the Czech Republic.
So now is the time to travel at least to a handful of places in the world. Be sure to do your research to see what the current exchange rate is in the country or countries you are looking to visit. Then take a look at historical exchange rates to see if, and how much, traveling there would be a good deal.
Lastly, if you are looking for a deal to the Caribbean, look elsewhere. The small island nations tend to “peg” their currency to the US Dollar. This means that $1 US Dollar equals $2 of the island nation. So no matter if the dollar is strong or weak, the exchange rate will always be the same, 2 to 1.