Aussie weaker in most countries this year
Australian travelers are getting better value for money in most overseas destinations compared to a year ago due to a weaker Australian dollar as the coronavirus outbreak continues to dampen demand for trips.
Airlines around the world, including Qantas and Virgin Australia, have reported a sharp drop in attendance as the aviation industry is hit hard by global travel bans.
Currency analysis from booking site Expedia shows the value of the Australian dollar has fallen against all major currencies, making overseas travel increasingly expensive and providing another reason to delay vacations abroad as the coronavirus epidemic continues to spread.
Our silver is worth almost 10% less in Indonesia than it was a year ago, when the Australian dollar is down 8.6% against the British pound and 7.8% against the US dollar.
There were also declines against the euro (4.7%), Japanese yen (8.8%), Thai baht (8.1%), Chinese yuan (5.1%) and to the Fijian dollar (4.5%). Even the New Zealand dollar appreciated against ours (1.5 percent).
Ray Attrill, head of foreign exchange strategy at National Australia Bank, says Australia’s historically low interest rates and the ongoing US-China trade war are two reasons our dollar is worth less.
“Holidays abroad almost anywhere in the world are going to be more expensive for Australian tourists,” Attrill said.
South American destinations Chile and Brazil are about the only two countries where the Australian dollar is stronger in real terms than 12 months ago.
Chile is almost 10 percent cheaper in real terms while Brazil is almost 5 percent cheaper, Attrill said.
Chile and Brazil also removed entry fees for Australian citizens last year.
Besides getting better value for money, another advantage of traveling to South America is the lower number of coronavirus cases due to the continent’s isolation. So far, there are only a handful of confirmed cases in Brazil, Chile, Ecuador and Argentina.
While our dollar buys about 50% more Argentine pesos than in February of last year, soaring inflation in the country means the value for money is worse overall.
Mr Attrill said it was important to factor inflation into account when determining value for money, warning travelers to Argentina would experience “a pretty big shock” if they expected lower prices due to currency devaluation.
“Turkey is 6% cheaper, but inflation is 12%, so it’s actually going to be more expensive. The currency hasn’t fallen enough to compensate for higher prices in Turkey against Australia.” , did he declare.
But while the weaker Australian dollar is bad news if you’re planning an overseas vacation, Tourism Australia says there are major benefits for the tourism industry.
“It makes Australian vacations more affordable for international visitors, which is great for inbound tourism,” said Managing Director Phillipa Harrison.
“The weaker dollar is also benefiting domestic tourism, encouraging more Australians to vacation at home as they see the cost of vacationing abroad rising.”
NAB’s Attrill agrees, saying 2020 should be “the year of ‘stay’.”
“Everyone should go to [NSW] the south coast and Kangaroo Island, ”he said.
It seems like forever since our dollar was worth US $ 1.10 in 2011, while two years ago the exchange rate was 81 cents more favorable.
The days when the Australian dollar hit US $ 1.10 may be long gone, but Attrill predicts things will improve slightly for those going overseas this year.
“Based on our outlook for the Australian and global economy, our best guess is that the Australian dollar looks a bit better in the next 6 to 12 months than it does today.”
Expedia Australian director Alex Ozdowski recommends “being flexible, researching and keeping an eye on currencies” to get the best deal overseas.
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