DestinationsPrices are rising everywhere, but the desire to travel won’t be dimmed.

Currency crisis: No need to panic, just enjoy the trip

The mighty US dollar is shaking up the financial markets.
The mighty US dollar is shaking up the financial markets. Photo Credit: GettyImages/Lazy Bear

The ringgit has been rattled; the pound has been pummelled; the baht has been battered; and the less said about the yen the better.

Across the globe, currency markets are in turmoil. Only the safe haven US dollar has risen above the carnage, leaving travellers confused about where their precious pesos or pounds will deliver them the best value holiday.

Will it be Disneyland California or Disneyland Paris? New York or New Zealand? Phuket or Pyongyang? Perhaps not Pyongyang, where the North Korean won has been holding its own in currency markets.

The internationally traded Chinese yuan has fallen to its lowest level since data first became available in 2011. The Japanese yen has depreciated about 20% against the US dollar this year.

The pound recently fell to its lowest level against the dollar in 37 years, the result of which, according to research from travel money specialists, No1 Currency, is that a fifth of holidaying Brits are cutting down on restaurant meals, with roughly 20% avoiding room service in hotels.

It is no coincidence that countries in Asia have followed Japan’s move to wind back pandemic travel restrictions. The quick recovery of tourism in pandemic-plagued destinations will pump money into flagging economies after two years of stagnant growth.

Moves in the US to hike interest rates while other countries have eased theirs are only part of the foreign exchange crisis that has impacted travel.

Increasing energy, supply chain and distribution costs are driving some countries towards recession.

And while some dollar-rich tourists will benefit from weak currencies when they travel to Bangkok, Kuala Lumpur or Sydney, they will be paying more for their flights because demand is way ahead of capacity, and international fares are skyrocketing.

Travellers will also find higher prices on the ground when they reach their destinations, wiping out the gains from swapping their dollars into local currencies.

As one golf tour operator in the UK puts it, “The net effect is much the same - what the Americans are saving in the exchange rate is offset really by the amount of increase in input prices across the board - the prices we pay for golf courses, for hotel accommodation, car rental and so on."

CONCLUSION: Exchange rates fluctuate. They can come down as fast as they rise. More aptly, after more than two years of lockdown, people’s appetite for travel won’t be stopped just because they are paying a few cents more for a coffee in Kuta or a few dollars more for a spa treatment in Saigon.

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