As global currencies continue to plummet against the surging US dollar, Australian travellers heading to some destinations will be able to cash in.
Australians may want to hold off that trip to the United States, with one Australian dollar currently trading for US64¢ – dropping from about US72¢ at the start of the year.
But the Australian dollar is trading at multi-year highs against the currencies of some of our favourite travel destinations: New Zealand, United Kingdom, the eurozone and Japan.
The Australian dollar hasn’t traded this strongly against the British pound in about five years, currently buying about 58 pence. The New Zealand dollar has declined against Australia’s steadily since late last year.
It’s prompting some Australians to exchange their cash now, with Japan proving particularly bargainous ahead of the nation’s reopening to independent travellers on October 11.
Against the yen, the Australian dollar is trading at its highest in about seven years, buying 93.91 yen per Australian dollar – 28 per cent more than the same time in 2019.
“The Japanese yen has gone down particularly because the central bank of Japan has left interest rates on hold and around zero, while in Australia we’ve raised interest rates,” said Dr Shane Oliver, chief economist and head of investment strategy at AMP.
“Consequently there’s been a flow of money out of Japan and it’s become more attractive for global investors to park their money in Australia.”
Anamaree Williams, based in New South Wales’ Riverina region, booked a 2023 family holiday to Japan while the nation was still closed to tourists earlier this year. As the Japanese yen weakened further last week, Williams saw it as an opportunity to secure some additional spending money.
“As soon as Japan’s [mass] reopening was announced, I transferred $2000 Australian dollars into yen – I put $1000 on a travel card, and exchanged $1000 for cash, just so I had a bulk of cash, so then if the rate did skyrocket before our trip I’d be OK,” said Williams.
InsideJapan Tours’ Harry Sargant said the popular Japan Rail Pass is now “a steal” for Australians.
“A seven-day ordinary class pass, covering unlimited train travel across almost the entire rail network would have set you back $420 in 2019 – yours for about $330 today,” said Sargant.
Entry fees, lunches, local transport, and package tours are all now cheaper than just before the pandemic, said Sargant. He added the company’s popular 14-day “Best of Japan” self-guided tour was now selling for $3510 per person, down from $4300.
Spending or changing over the money now is the only way to avoid exchange rate shock, according to Oliver.
“There are credit cards where you can lock in exchange rates at today’s rate, so you purchase amounts to cover your travel costs,” said Oliver. “The risk with any exchange is that the Australian dollar may go up in value before you leave.”
Travellers should also factor in surging airfare prices, warned Canstar finance expert Stephen Mickenbecker, as they may cancel out any exchange rate benefits.
Williams was fortunate to book flights before demand surged.
“I didn’t realise Japan was closed when I booked,” Williams said, laughing. “I’ve got two teenage children. For the April school holidays, return fares were about $2600 for the three of us from Sydney direct to Tokyo. I checked fare prices again last week, and they are now $5500.”
That fare demand is likely to remain strong, as Australians flock to the Land of the Rising Sun for the nation’s popular autumn festivals, winter ski season, and cherry blossom season, carrying through to next April.
“Pent up by two years of no travel and fuelled by a high saving rate during lockdowns, airfare demand is now rocketing,” said Mickenbecker.
“The airline industry is not one that can rapidly expand supply, limited by airport capacity, fleet size and staffing shortages. This means higher prices. Currency is just one aspect to be considered.”
WHAT YOUR DOLLAR BUYS
- 93.91 JPY (10% more since January, 2022)
- 0.58 GBP (6% more since January, 2022)
- 0.66 EUR (3% more since January, 2022)
- 1.13 NZD (7% more since January, 2022)