A falling Australian dollar may mean that overseas travel becomes more expensive, but just how much difference does it really make to your travel plans?
If the dollar were still at parity against the greenback then a trip to the US would match dollar for dollar. At current levels of exchange in the low US90 cents, it will still only cost you less than $100 extra for every $1000 you spend.
However, Reserve Bank governor Glenn Stevens recently warned that the Australian dollar is still way too high, which suggests it may have further to fall.
Clearly, if the dollar were to drop to US80c this would have a greater impact on your travel budget – and, of course, the bigger your budget, the greater the extra cost.
So if the US appears more expensive as a holiday destination this year, what are the top hot spots where your money will travel further?
Japan tops the list
According to Expedia’s latest annual survey the top two countries where your dollar will drive further are Japan and Indonesia.
In 2013 the Australian dollar rose 2.3 per cent against the yen and that appreciation has continued during 2014. A reasonably close destination, Japan can prove exciting whether it’s geishas, cherry blossoms or bullet trains that capture your imagination.
Next on the Expedia list was Indonesia where the Australian currency rose 7 per cent against the rupiah during 2013, a trend that also continued into the current year. Indonesia has always been a great favourite for Australians, particularly Bali with its mystical temples, surf, yoga retreats and picturesque rice paddies.
But it’s not just the exchange rate that can make a difference to the price of a holiday. The cost of living in your holiday destination is also a significant factor.
Expedia’s list of top destinations based on purchasing power rank Brazil, Canada and Thailand as the next three places after Japan and Indonesia.
Brazil could be a perfect destination to cross off your bucket list now that the World Cup is over as the infrastructure to cater for tourists has been established.
Canada, equally, has much to offer from skiing in Whistler to the French-influenced Quebec province.
Thailand has the additional advantage of being close to Australia.
Cruises are also worth considering. Not only do you get the benefit of visiting a range of countries but you only have to deal with the one exchange rate on board.
Strategies to stretch your dollar
Wherever you choose, there are strategies you can put in place to minimise the impact of an exchange rate moving against you.
For example, if you believe Glenn Stevens’ prediction that rates will fall significantly lower, then why not load a prepaid card with the foreign currency of your destination now, so that it is locked in?
Also consider paying your accommodation and other charges ahead of time while the dollar is still above US90c.
Another strategy is to use cash rather than credit cards while you are away as the exchange rate used on the cards may not always favour you.
A falling dollar shouldn’t mean that you have to shelve your holiday plans. Unless you are planning on spending hundreds of thousands of dollars, the changes in exchange rates may not be as big as you fear.