Last August, a hotel room in Europe priced at 200 euros was about $224. Today, travelers spending American dollars would pay only $208.
On the rise since last autumn, the dollar is strong compared with a number of foreign currencies, including the euro, the Japanese yen and the Canadian dollar. And President Trump’s tariff threat is only making it stronger.
For travelers, the exchange rate bonus makes trips abroad extra appealing.
“We’ve seen an increase in international bookings as travelers look to maximize the value of their dollar abroad,” said Michael Johnson, the president of Ensemble, a travel agency consortium. “The strength of the U.S. dollar has made destinations in Europe, Asia and South America more attractive, as travelers can get more for their money.”
In these dynamic and unpredictable times, whether the dollar will remain strong is anyone’s guess. To understand the fluctuations of the foreign exchange market and how and where to take advantage of it, we asked travel and financial experts to weigh in.
Strong present, uncertain future
A number of factors influence the value of the dollar. Among them, said Michael Melvin, the executive director of the master of quantitative finance program at the University of California San Diego, are economic growth and geopolitical risk.
In recent years, “The U.S. has had exceptional economic growth relative to other countries,” Mr. Melvin said, noting the higher interest rates imposed by the Federal Reserve to combat inflation only made the dollar more attractive to investors.
International conflicts such as those in Ukraine and the Middle East also lead to investments in U.S. Treasury bonds. “The U.S. dollar has a safe-haven role to play in uncertain times,” Mr. Melvin said.
Talk of tariffs has created more volatility. When 25 percent tariffs were recently threatened against Canada and Mexico, their currencies initially plunged against the dollar. They have since recovered after postponements were announced, but still offer good value.
Alex Cohen, a senior foreign exchange strategist for Bank of America, expects the dollar to remain strong for the first half of the year as the new administration’s policies take effect.
The outlook for travelers
The exchange rate benefit largely affects foreign travel purchases like food, gifts and hotel bills, rather than airfare, particularly for those flying on American carriers, where pricing is in dollars.
Travelers are noticing the potential for…
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