The dollar value of the euro is near its lowest point in two decades, which is good news for American travelers headed to Europe this summer.
By taking advantage of a favorable exchange rate, travelers’ dollars will go further when making purchases while traveling abroad.
“Right now, your money goes further in Europe than it has in quite a few years, and it’s a great time to have that dream trip you’ve been putting off to Italy, France or Spain,” said Kate McCulley,
- In terms of value, the euro is close to parity with the dollar. The last time these currencies were equal was in 2002.
- Those traveling to one of the 19 European Union countries that accept the euro are getting a 15% discount on purchases relative to a year ago, because of the exchange rate.
- However, there are certain strategies travelers can use their debit and credit cards to increase their savings.
Parity-based pricing approaches are comparable to obtaining a 15% discount.
All European countries do not use the euro, even though it is the official currency for 19 out of 27 European Union members.
Here are the countries in this category : Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
It is likely that the euro will soon have the same value as the U.S. there hasn’t been a 1:1 exchange rate between the two currencies since 2002, when the euro was in its infancy.
One of the factors leading to the euro’s declining exchange rate.
Among the causes of the relative decline of the euro are the ongoing war in Ukraine, which has fueled fear of an energy crunch and recession, as well as U.S. interest rates going up, driving investors away from the euro and towards the dollar.
Currently, one euro is worth $1.01 — 11% less than $1.13 at the beginning of the year and 15% less than $1.19 a year ago.
For example, an American who bought a sandwich for $15 in Paris a year ago would have paid about $17.80. Today, the traveler would pay roughly $15.10.
Due to inflation in us, travel costs are rising
It’s a good time to take advantage of the discounts because of high inflation rates, so it’s not inexpensive to travel at this time.
According to the U.S. Travel Association’s Travel Price Index, domestic travel costs in May were close to 19% higher than the same period last year, before the pandemic. (Domestic travel costs are also higher than last year, but that partly reflects a comparison to low pandemic-era prices, according to the association.)
Meanwhile, there appears to be a growing demand for international travel by Americans, fueled by factors such as the recent scrapping of the requirement that foreign travelers undergo Covid-19 testing, and the lifting of a separate mask requirement for air travel.
Euro/dollar will break parity soon, says Nomura
Approximately 34% of U.S. travelers plan to travel abroad this year, up six percentage points in a month, according to a new survey by Destination Analysts, a tourism market research firm. The company polled 4,000 travelers June 15-23.
Asked what foreign destinations they are most interested in visiting in the next year, European destinations comprised 6 of the top 10 most commonly named, as reported by Destination Analysts.
The number of flight searches to some of Europe’s most popular destinations have been significantly higher this week than last, according to Expedia data. Searches for Paris and Frankfurt flights each jumped 25%, while interest in Brussels, Amsterdam, and Dublin each rose 20%.
There was also an increase in hotel interest in some cities, according to Hotels.com. Prices for accommodations in Copenhagen rose by 30%, those in Athens were up 15%, and those in Madrid rose by 10%.
“It’s become an expensive time to travel,” Rathner said. “ however, people want to get back out there.
“People are ready to travel again,” she stated.
Exchange rate advantage strategy
If at all possible, Americans should use a credit card that does not charge foreign transaction fees in order to take advantage of the favorable exchange rate. That 3% fee can make all the difference in getting the most out of the euro-dollar savings, Rathner said.
You should bring a backup credit card (if you have one) as well as your primary one in case your card isn’t accepted in certain establishments, she advised. Generally, this is due to the brands of cards — although Visa and Mastercard are widely accepted worldwide, that’s less true of American Express and Discover, Rathner said.
Furthermore, travelers who book hotels or tours in advance (and have the option to apply a charge now or pay it later) might want to pay now to make sure they’re getting the best rate, McCulley said. The exchange rate may not get more favorable in the future.
Cash travelers should avoid converting their currency before a trip, according to authorities. “Ninety-nine percent of the time, it’s unnecessary, and you’ll get a worse conversion rate,” said McCulley.
However, it is typically better for travellers to withdraw money from an ATM in their destination country, travel experts said
The Points Guy, Brian Kelly, will share with you how to prepare for the travel season that comes with summer. The first thing a traveler should do is make sure that the country’s ATMs accept his or her debit card. Banks also generally charge fees to withdraw money from ATMs while travelling; travellers can evaluate how much cash they will need for the whole trip in advance and make one withdrawal instead of multiple withdrawals, according to Rathner.
Likewise, the operator of an ATM may ask the user if they want to get their money with conversion or some similarly worded prompt. Basically, this process, known as dynamic currency conversion, entails the ATM operator performing the currency conversion rather than the bank.
Although ATM operators typically offer worse exchange rates than travel agencies, travelers should turn down the conversion offer, experts said. The same principle applies to merchants who ask similar questions concerning credit or debit card transactions.
If you’re thinking about traveling to Europe, now is a great time to do it. The euro is currently near parity with the US dollar, which means you’ll get more bang for your buck.