2008 Woodie Awards
Weaking dollar may affect international travel plans
Chris Slaughter
Issue date: 3/13/08 Section: News
College students traveling to other countries during spring break may receive an expensive lesson on the state of the U.S. economy.
The U.S. dollar, a longtime symbol of stability, has taken a beating over the last few months. Currencies from Europe, Australia, Japan and other locations have seen their money rise against the dollar. Even the Canadian dollar has become worth more than the U.S. dollar.
For travelers this will mean paying extra attention to expenses.
"You'll have to more carefully plan, maybe staying in a youth hostel or going to grocery stores rather than eating out all the time," said Christa Joy, the director of the study abroad program at the University of Nebraska-Lincoln.
Debit cards are an easy way to spend money on the go, but there is the possibility for surprises.
"Usually with electronic transactions you get the best exchange rates, but you do need to be on the watch for ATM charges," Joy said. This is because the international conversion fee (what banks charge to use debit cards) is often lower than using exchange services.
"Keep track of things. Write things down. Work out a budget for yourself so that if you're planning to spend $30 a day on food, keep track of how much it is in the other currency," she added.
The current recession is partially to blame for the lower exchange rate, said Craig MacPhee, an economics professor at UNL.
"We have had a policy of cutting interest rates the past year, and when those interest rates go down they make dollar assets look less attractive to foreigners," he said.
"If you can make a deposit in European banks in euros and earn 5 percent interest, then why would you do it in American banks in dollars and make 2 percent interest?"
As the dollar continues to weaken, investing in the U.S. becomes even more risky, and the cycle continues.
"The dollar has become less desirable as more and more people get worried about the quality of U.S. investments. As the demand for the dollar stops growing so much, the price of it falls," MacPhee said.
Just this past week the dollar reached new lows against the euro - 65 of euro cents per American dollar.
Sarah Holdt, a senior psychology major, felt the full brunt of the souring exchange rate when she went to Spain last summer.
"It was disappointing because if we had gone the year before, it would not have been as expensive," she said. "We survived off pasta for a month."
Even with the bad news on the exchange rate, Joy said students shouldn't scrap travel plans.
"My theory is that there's always something that's wrong, either the dollar is bad or airfares are bad." she said. "But if somebody's ready to go to Europe, if the time is right, that's when they should go, and the budget may just have to adjust."
chrisslaughter@dailynebraskan.com
The U.S. dollar, a longtime symbol of stability, has taken a beating over the last few months. Currencies from Europe, Australia, Japan and other locations have seen their money rise against the dollar. Even the Canadian dollar has become worth more than the U.S. dollar.
For travelers this will mean paying extra attention to expenses.
"You'll have to more carefully plan, maybe staying in a youth hostel or going to grocery stores rather than eating out all the time," said Christa Joy, the director of the study abroad program at the University of Nebraska-Lincoln.
Debit cards are an easy way to spend money on the go, but there is the possibility for surprises.
"Usually with electronic transactions you get the best exchange rates, but you do need to be on the watch for ATM charges," Joy said. This is because the international conversion fee (what banks charge to use debit cards) is often lower than using exchange services.
"Keep track of things. Write things down. Work out a budget for yourself so that if you're planning to spend $30 a day on food, keep track of how much it is in the other currency," she added.
The current recession is partially to blame for the lower exchange rate, said Craig MacPhee, an economics professor at UNL.
"We have had a policy of cutting interest rates the past year, and when those interest rates go down they make dollar assets look less attractive to foreigners," he said.
"If you can make a deposit in European banks in euros and earn 5 percent interest, then why would you do it in American banks in dollars and make 2 percent interest?"
As the dollar continues to weaken, investing in the U.S. becomes even more risky, and the cycle continues.
"The dollar has become less desirable as more and more people get worried about the quality of U.S. investments. As the demand for the dollar stops growing so much, the price of it falls," MacPhee said.
Just this past week the dollar reached new lows against the euro - 65 of euro cents per American dollar.
Sarah Holdt, a senior psychology major, felt the full brunt of the souring exchange rate when she went to Spain last summer.
"It was disappointing because if we had gone the year before, it would not have been as expensive," she said. "We survived off pasta for a month."
Even with the bad news on the exchange rate, Joy said students shouldn't scrap travel plans.
"My theory is that there's always something that's wrong, either the dollar is bad or airfares are bad." she said. "But if somebody's ready to go to Europe, if the time is right, that's when they should go, and the budget may just have to adjust."
chrisslaughter@dailynebraskan.com
Viewing Comments 1 - 1 of 1
Edgar Pearlstein
Edgar Pearlstein
posted 3/13/08 @ 11:56 AM CST
It should also bbe pointed out that the rising cost of oil is partly due to the lowering value of the dollar.
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