Travel traps caused by currency crash, but the pain can be beaten

A return to international travel for many Australians is being soured by a sinking dollar. Here’s how to reduce the discomfort.

Just as millions of Australians plan, book and take holidays overseas for the first time in several years, our currency is getting crunched.

The Aussie dollar is being battered by rising fears of global recession, surging US interest rates, war and other geopolitical worries, and its sharp fall could potentially add thousands of dollars to the cost of a family holiday.

Since April the Australian dollar’s value has dropped from US76c to US64c, a budget-bruising 16 per cent fall in purchasing power for anyone heading to the US or the many other countries that anchor their currencies to US dollars or use it as their official currency.

It’s a far cry from the $US1.05 or $US1.10 you could get for each Australian dollar back in 2011 and 2012, and is understandably frustrating for future travellers.

Economists say our dollar could fall even further – possibly towards US60c by the end of the year.

Beyond that is anybody’s guess. Financial markets usually rise or fall much further than anybody expects. Years ago I was caught out financially in South East Asia when our dollar plunged to US47c and my bank balance shrunk faster than Optus’s reputation.

If you’re banking on a return to the good old days of US dollar parity, you’ll probably be waiting a long time. The last time it happened, it took a decade from bottom to top.

Nobody really knows whether our currency is going to get weaker or stronger soon, and while we cannot control what direction it will head, there are a few ways for travellers to minimise its negative impact.

SPREAD OUT TRAVEL SPENDING

If you’re not departing for several months, pay for some purchases now – such as flights or accommodation – then wait a while to book and pay for other stuff or get your foreign cash.

This will smooth out currency fluctuations, and you will also probably spend a lot of money once you’re actually overseas, given the world’s rapid move towards digital and online payments.

GET THE BEST DOLLAR DEAL

Buying foreign currency at the airport is usually a bad idea as they offer the worst exchange rates to last-minute buyers who have nowhere else to go.

Check online to compare exchange rates, and you should find that smaller capital city currency exchange businesses will give better rates and lower fees that the big banks and bureaus.

DESTINATION SWITCH

If the currency plunge is really upsetting you, consider altering plans to go somewhere that allows your dollar to travel further.

New Zealand, Japan, Britain and Europe are among the places where the Aussie dollar’s value has improved this year.

However, it’s not a good idea to go somewhere just because of the exchange rate. Travel is about experiences, and is a spending power loss of 15 or 20 per cent enough to prevent you from exploring your dream destination?

DON’T FEEL DEFEATED

Worrying about something that’s out of your control will achieve nothing. Put the Aussie dollar’s dive into perspective by comparing your wealth, safety and lifestyle with the pain and suffering endured by those living in countries smashed by economic collapses, poor living standards, or war.

We Aussies are all in the same boat. You’ll have plenty of compatriots feeling the same frustration about currency weakness – well, at least those Australians who can afford to travel overseas.

Originally published as Travel traps caused by currency crash, but the pain can be beaten