Exchange Rates Affect Holiday Plans

An exchange rate is simply the price of one country's currency expressed in another country's currency. The exchange rate is the rate at which currencies can be exchanged.

A good example is that of the dollar vs. the euro. In April 2008, one dollar could be exchanged for 0.63 euros. The dollar is currently weak in exchange against the euro. This means the U.S. tourist planning a vacation in Europe or the Mediterranean probably won't receive the best value for per dollar spent.

Many factors help determine the exchange rate of one currency vs. another. Supply and demand is only one of the factors. Each country's government, interest rates and inflation, as well as the stock market are also contributing factors. The most trustworthy locations to exchange money are banks, exchange bureaus and ATMs. Credit cards are a viable way to spend money while traveling internationally because they offer a form of payment in nearly any currency.

The dollar and sterling are steadily losing ground to the euro. Ever-changing exchange rates are going to make international travel a bit more expensive this year. Less than one year ago you could buy ah undred euros for 67 pounds. The same transaction today costs just over eighty pounds or about $63.

International travelers are relying more and more on ATMs to exchange currencies while travelling. Most travellers say this form of exchange bypasses the exchange bureaus that often charge high commissions.

Others argue that banks offer the better exchange rate without charging unreasonably high fees. To ensure you receive the best exchange rate at the time of your planned vacation, check with your bank, your credit card company and the exchange bureau. Some credit card companies have begun charging a flat fee for overseas purchases. This fee is charged in addition to foreign exchange fees the customers already pay.

When booking your hotel internationally, look for dollar rate guarantees offered by many international hotels. This will help protect you from fluctuations in currency exchange rates. Hotels offering a dollar rate guarantee often book more quickly than those that do not. When possible, try to book your hotel several months in advance to lock in a good monetary exchange rate.

Monetary conversions will definitely take their toll on holiday goers this holiday season. Tourists will need to be more mindful of when to exchange their currency. As exchange rates change, the overall cost of the international holiday increases. An apartment that would have cost $100 per day six months ago now costs about $120 per day. Over the course of a 2-week vacation, this could determine the difference between international travel and changing plans entirely.

Recent exchange rate changes in favour of the euro could also mean more international visitors to the U.S. and Europe from other areas of the world. If the dollar and sterling continue to fall, new doors could be opened for tourists wishing to visit the U.S. and Europe.

Brits looking to enjoy an American holiday have recently been able to take advantage of the exchange rate. One pound currently purchases almost two dollars, making it advantageous for Britons who enjoy spending time in the U.S.

Those looking to purchase property overseas will also feel the pinch. Properties that previously cost the U.K. purchaser 105,000 pounds now cost 120,000 pounds due to present exchange rates. Depending on your point of view, current exchange rates could prove to be quite favourable.