If you have travel plans in the next few months, lucky you! You will likely discover that foreign travel has become a relative bargain as your greenbacks are now stretching much further overseas than ever before.
The U.S. Dollar has appreciated against other currencies like the British Pound, the Euro and the Yen. That makes foreign goods and services cheaper, and means you’ll get more bang for the buck when you’re exchanging U.S. dollars for other currencies or are spending dollars at foreign hotels and restaurants.
The dollar is strong, say experts at Fidelity Investments, “because the U.S. economy is healthier than those of many other countries and because the Federal Reserve keeps raising interest rates.” That attracts dollars to the U.S. and drives up our currency’s exchange rate.
Last week, I returned home from my first trip to Europe since the outbreak of COVID in 2020, and was amazed to find the Euro at parity with the Dollar (that means that 1 Euro equals roughly 1 U.S. Dollar). The Euro hasn’t been that low since 2002. Loading up on café au lait, croissants, and pain au chocolat in the morning to take back to my travelmates cost me less than half of what I would have paid at a stateside Starbucks. For the first time ever, delicious French restaurant fare, wine and groceries seem bargain-priced when compared to today’s South Florida cost of living. (Not to mention that in France, that bottle of water can cost more than a bottle of wine, but that’s another story!).
I think there are two things at work here. First, due to inflation and the lingering effects of the pandemic, South Florida has gotten very expensive. I’ll share with you in a coming week some of the very real cost concerns on my clients’ minds, and their fears that living here may be getting too costly to manage. And while the cost of living has ballooned where I live, selected prices in France seem to have been more restrained for the foreign traveler on a relative basis, at least from what I observed, due to the very favorable exchange rate. How else can you explain a half dozen breakfast pastries, a couple cafés au lait, and a baguette for under $10?
Final thought: If you have been putting off that trip since pre-COVID, take a fresh look and price it out. You may just find that now is the perfect time to pack your bags and go!