Where the U.S. dollar is still strong for travelers

Depending on your dream destination, your bucket-list trip may now be a value vacation.

Though the U.S. dollar is slumping at home, it is still strong in many countries around the world. For travelers, this means they may not have to scrimp and save for years to visit such aspirational destinations as South Africa, Japan or South Korea.

"The epic destinations that tend to be on people’s bucket lists for a while are not a dream," said Steve Born, chief marketing officer for Globus brands, which includes tour operators Globus and Cosmos and the river cruise company Avalon Waterways. "The price point makes them a reality."

On the domestic front, inflation is high and prices are rising, said Gabriel Mathy, an associate professor of economics at American University. The Federal Reserve’s decision to lower the interest rate this month could further weaken the dollar.

Costs are climbing abroad, too. However, visiting a country with a favorable exchange rate and a lower cost of living can feel like an automatic discount. You can buy more for less.

"When the U.S. dollar is strong, it can mean more bang for your buck when you’re in your destination," said Laura Lindsay, global travel trends expert at Skyscanner. "Travelers may be able to upgrade their arrangements or tack on a few days to their trip while still staying with their designated budget."

Examples roll off the tongues of budget travelers like Matt Kepnes and Sean Keener, co-founder of BootsnAll, an online source for global adventurers. Indonesia, Australia, Thailand, Vietnam, New Zealand, Canada — and that’s just for starters.

Osaka over Buenos Aires

Currencies fluctuate, but a handful of destinations have been consistently affordable because of their weak exchange rate against the U.S. dollar, Mathy said. South Korea, whose won dropped to a record low against the dollar this spring, is newer to this club, joining such stalwarts as South Africa, Thailand and Japan.

The Japanese yen has been declining for decades and has lost more than a third of its value in recent years. Foreigners are jumping on the opportunity. Nearly 37 million people visited last year, including more than 2.7 million Americans, 33% more than in 2023, according to the Japan National Tourism Organization.

Accommodations are surprisingly reasonable. The Hotels.com Hotel Price Index, released in June, flagged Osaka as one of its "best value stays," averaging $152 a night last year. Though room rates in Kyoto and Tokyo increased by 13 and 12%, respectively, between 2023 and 2024, the Japanese cities are still significantly cheaper ($190 and $200) than New York ($328) or Boston ($303).

"Because of the exchange rate, combined with the good value that already existed there, you’re double dipping on getting a good deal," said Melanie Fish, a Hotels.com travel expert.

To meet demand, the Globus company has expanded its Japan tours. The 12-day Cosmos tour "Classic Japan: Land of the Rising Sun" works out to less than $300 a day, Born said. Guests on these group tours are paying 35% less than they would have a few years ago, he noted.

The tour operator also added South Korea to its portfolio, a rising star among cost-conscious travelers. Another sign of its growing popularity: On Sept. 12, after launching service to Tokyo Narita International Airport, Alaska Airlines started nonstop air from Seattle and Seoul on Hawaiian Airlines. It celebrated the route with a "buy one, get one free" offer.

Since these trips are still big investments, especially when you factor in international airfare, it’s wise to keep tabs on a country’s economy. Lindsay urges travelers to track currency movements and "strike when the dollar is the strongest to get the most bang for your buck."

For Argentina, that moment could be waning. Since President Javier Milei took office, inflation, which hit a record high in 2023, has been falling. Mathy described its peso as overvalued and its position as a cheap travel destination "in the rearview."

Born said that though the exchange rate advantage has narrowed, Argentina remains a good value.

To take advantage of a favorable exchange rate, you don’t need to jet off immediately. But you should lock in the heavyweight expenses — accommodations, transportation, tours — as soon as possible. And remember to prepay in the local currency.

Take the Big Mac challenge

Plugging numbers into a currency conversion calculator is easy. Understanding the purchasing power of the U.S. dollar can be more challenging. The McDonald’s hamburger can help.

When researching destinations, Mathy recommends the Big Mac Index, a tool created by the Economist that uses the fast-food chain’s burger to compare currency values. Because the McDonald’s meat patty is standardized around the world, you can ascertain how far your money will stretch in different countries. In Argentina, for example, he said you’d pay $6.55 for a burger, much more than in South Africa, where a Big Mac costs $2.85.

"Your dollar would go further in South Africa," Mathy said. "It might be better to skip the flight to Buenos Aires and think about safaris in South Africa instead."

For a snapshot of a country’s cost of living, Kepnes will use Expatistan, which lists the price of goods and services in a specific city or country, and compares expenses between destinations. For example, in Lima, Peru, a cappuccino in an expat area is listed at $3.82, and a beer in neighborhood pub goes for $2.60. Living in Peru is 55% cheaper than in the United States, according to the site’s calculations. Expatistan is based on crowdsourced information and could be dated, so Kepnes advised using it as a "rough idea" of conditions on the ground.

Kepnes also suggests browsing guidebooks for prices. Even if the book was published a year or two ago, he said, "there could be some inflation, but it’s not going to triple and go from $5 to $25."

If you’d rather not do the math on exchange rates, Mathy recommends visiting a destination that uses the U.S. dollar as its official currency. Ecuador, Panama and El Salvador all accept greenbacks and are cheaper than the currency’s home country.