This was published 4 years ago
Australia dollar value for money overseas: Aussie weaker in most countries this year
By Josh Dye
Chile is one of the few countries in the world where the Aussie dollar now goes further.Credit: iStock
Australian travellers are getting less value for money in most overseas destinations compared with a year ago due to a weaker Australian dollar, as the coronavirus outbreak continues to crimp demand for travel.
Airlines around the world, including Qantas and Virgin Australia, have reported sharp declines in patronage as the aviation sector is hit hard by global travel bans.
Currency analysis from booking website Expedia shows the value of the Australian dollar has declined against all major currencies, making overseas travel increasingly expensive and providing another reason to delay overseas holidays as the coronavirus outbreak continues to spread.
Our money is worth almost 10 per cent less in Indonesia than a year ago, while the Australian dollar has declined 8.6 per cent against the British pound and 7.8 per cent against the US dollar.
There have also been falls against the Euro (4.7 per cent), the Japanese yen (8.8 per cent), Thai baht (8.1 per cent), China's yuan (5.1 per cent) and Fijian dollars (4.5 per cent). Even the New Zealand dollar has appreciated against ours (1.5 per cent).
Ray Attrill, National Australia Bank's head of foreign exchange strategy, says Australia's historic low interest rates and the ongoing trade war between the US and China are two reasons our dollar is worth less.
"Foreign holidays almost anywhere in the world are going to be more expensive for Australian tourists," Mr 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 per cent cheaper in real terms while Brazil is almost 5 per cent cheaper, Mr Attrill said.
Both Chile and Brazil also scrapped entry fees for Australian citizens last year.
Besides getting better value for money, another benefit of travelling to South America is the lower numbers of coronavirus cases due to the continent's isolation. So far there are just a handful of confirmed cases across Brazil, Chile, Ecuador and Argentina.
While our dollar buys about 50 per cent more Argentinian pesos than February last year, rampant inflation in the country means value for money is worse overall.
Mr Attrill said it was important to consider inflation when determining value for money, warning travellers to Argentina would get "quite a shock" if they expected cheaper prices due to the devalued currency.
"Turkey is 6 per cent cheaper but they've got inflation of 12 per cent, so actually it's going to be more expensive. Currency hasn't fallen enough to compensate for the rise of prices in Turkey relative to Australia," he said.
But while the weaker Australian dollar is bad news if you're planning an overseas holiday, Tourism Australia says there are major benefits for the tourism industry.
"It makes an Australian holiday more affordable for international visitors, which is great for inbound tourism," managing director Phillipa Harrison said.
"A weakening dollar also benefits domestic tourism too, by encouraging more Australians to holiday at home as they see the cost of an overseas holiday rise."
NAB's Mr Attrill agrees, saying 2020 should be "the year of the 'staycation'".
"Everybody should be going to the [NSW] South Coast and Kangaroo Island," he said.
It seems like forever since our dollar was worth $US1.10 back in 2011, while even two years ago the exchange rate was a more favourable 81 cents.
The days of the Australian dollar fetching $US1.10 might be long gone, but Mr Attrill is forecasting things to improve slightly for those heading overseas this year.
"Based on our outlook for the Australian and global economy, our best guess is the Australian dollar is looking a little better in the next 6-12 months than it is today."
Expedia's Australia director Alex Ozdowski recommends "being flexible, doing research and keeping an eye on currencies" to get the best deal overseas.
See also: The 11 biggest rip-offs in travel named (and how to avoid them)
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