Though we have noted that development before, the continued strengthening of the U.S. dollar is so evident, having such a major impact on vacation plans, that it needs to be discussed again. Although an increase in its value may be harmful to our economy as a whole, it creates new opportunities for the U.S. tourist.
Mexico is perhaps the outstanding example. Its currency is currently exchanged at a rate of more than 20 Mexican pesos for one U.S. dollar, radically reducing the cost of Mexican rooms, meals, and goods. While this may reflect a regretful worsening of relations between the U.S. and Mexico brought about by the Trump presidency, it cannot be ignored by the U.S. traveler. Several years ago, you received only 12 and a half pesos to the dollar, and prices have therefore come down by more than half for the U.S. traveler. Now’s the best possible time for a trip to Mexico!
The U.S. dollar is doing almost as well against the currency of Western Europe, the euro. Just six years ago, a euro cost as much as 1.60 U.S. dollars, and everything in Europe was expensive indeed. Today, a euro costs only $1.04—it is selling at almost par to the dollar—and prices have thus come down by nearly half as well. Today, when you view a European bill set forth in euros, you simply assume that the cost is almost the very same in dollars.
As for the British pound, it too is trending in favor of the U.S. tourist. Just three years ago, you paid $1.55 for one British pound; today, you pay just $1.22 for the same pound, a movement in your favor of more than 20 percent. Costs in Britain have thus become markedly more moderate for the U.S. traveler.
And so it goes. In nearly every foreign country, the U.S. traveler pays less than recently because the particular foreign currency has declined in value against the U.S. dollar. Consider the Japanese yen, which has now fallen to a level of 117 to the dollar (it used to be 70 to the dollar), causing Japan suddenly to be a moderately-priced country for Americans. Consider the U.S. dollar’s value vis-à-vis the Canadian dollar: One U.S. dollar now buys 1.35 Canadian dollars, and everything in Canada costs less (for Americans) than was the case when the Canadian dollar was actually stronger than the U.S. dollar.
And finally, consider the Chinese yuan. Though China (pictured: Shanghai) was once accused of deliberately keeping its Yuan low in value, it hasn’t engaged in currency manipulation for several years. “Floating” in value, according to supply and demand, the U.S. dollar now buys almost 7 Chinese Yuan—the exact current exchange is 6.94 Yuan to one dollar. When a U.S. tourist now travels within China and sees Chinese products for sale, that traveler simply divides by 7 to get the U.S. equivalent—and discovers the equivalent to be very reasonable in price indeed.
When we last wrote about the dollar’s strength some time ago, we never dreamed the dollar would continue to rise in value. And yet it has, making 2017 a good time to travel abroad.