Wednesday, October 05, 2011

Currency Volatility

Fluctuations in the value of currencies can have a big impact on travel costs. In recent weeks the U.S. dollar has gained significantly and is up nearly nine cents against the Canadian dollar, more than 10 cents compared with the euro.
While it is impossible to protect yourself totally against the impact of currency changes on travel costs, there are ways to minimize the problem. Once you have committed to a trip by buying an airline ticket or a tour package, you can estimate what your out-of-pocket spending will be in foreign currency and go buy that amount. (Currency exchange offices usually have slightly better rates than banks.) Then, whatever happens, you will have enough money in local currency to enjoy the trip.
If you travel to a particular country or region frequently, it can pay off to stockpile some currency for future trips, either in cash or in travellers cheques. (I still have some Swiss franc travellers cheques I bought in the 80s--not a great financial investment, but psychologically comforting.) Canadians are fortunate in having the possibility of opening bank accounts in U.S. dollars. I have one account that actually pays a little (very little) interest.
And if you visit one particular country very often, you may want to open a bank account in that country.
Any readers who have other suggestions on how to deal with currency issues, I'd like to hear them.