CHANGING EXCHANGE RATES

[thepiranha]

Have you noticed that the exchange rates for the dollar have changed dramatically? I was completely unaware of how strong the dollar is until I looked at the exchange rates in the business section of today's newspaper and was astounded to see that a Euro costs only $1.27. Is it possible that we may see a Euro costing only $1.00 in the foreseeable future? That would be amazing! I haven't been to Europe in two years because of the unfavorable rates, but I may have to rethink my personal boycott. In addition, we can get thirteen Mexican pesos for each dollar that we exchange. The exchange rate has been around ten pesos per dollar for years and this is a great surprise, especially since I'm going to Mexico in March. As a side note, most Mexican establishments take cash payment in pesos or dollars at the exchange rate of ten to one, regardless of the real exchange rate, because it is easy to figure out. I notice that many American pay in dollars, even though the exchange rate is usually more than ten pesos per dollar. If the exchange rate is 10.8 and you pay in dollars, you're paying 8% too much on all of your purchases. Now that the rate is up to thirteen to one, I'm curious to see if Mexican businesses are still accepting U.S. dollars at ten to one. If so, they're making 30% on the exchange. Has anybody been to Mexico recently and can they verify that? Thanks.

[bonniejoy03]

Hi P! Great math and Great points. Yes, the USD is finally a little more favorable to the euro. An issue in your computation is HOW to pay. I am finding that paying in USD or the local foreign currency is the way to go. Forget using the credit card!! Most credit card companies tack on a 2 or 3% fee if the purchase is in foreign currency. Some (Bank of America) even charge what is called a "foreign COUNTRY fee" That is a fee o 2-3% if the bill is in USD but the country is not the US. (For example, Anguilla commonly uses the USD-also the EC but bills are typically in USD. BOA charges a fee because the bill is not the US!) You must be really careful when deciding to pay.



Thanks for bringing this up!! Have a great trip to Mexico in March.

[kyshel]

All good info and excellent reminders of fees/rates and surcharges.
We found one hotel in Bali that quoted US$ THEN converted back to rupiahs to add to minor food/bev charges (all at an unfavorable exchange) THEN added 3% for using a credit card!! Of course, the CC bank then charged a conversion fee (very small) to bill in US$.

We've found that by using a fee-free (reimbursed charges) with a local currency ATM is the only way to go. The exchange rate is current and fair, with minimal loss at conversion. Even if we are running low of local $, we pay as much cash as possible prior to charging anything on a credit card.
Even though my husband travels half the world with the airline, he seldom ever brings back foreign monies (except for a few euro).

[CMDAVILACLI]

hi thepiranah,

I was in Mexico a couple of weeks ago, and in answer to your question whether some Mexicans just make the exchange rate at 10 pesos to the dollar... YES, this is still happening, but mainly in the smaller areas and not the hotels etc. The math is so much easier for everyone when they do it... but alas, the americans making the exchange are loosing a whopping 30% buying power with their money.

As always, I just pop into one of the many, many ATMS available and do the exchange via the machine, and then pay in pesos. I always find out which bank has reciprocity with the local banks and then I am not charged the outrageous foreign exchange fees etc... This past go round, I got 13.2 pesos to the dollar and no fees assessed! When I was in Mexico at the end of August, I only got around 10.8 pesos to the dollar! So this past trip was much cheaper for me!



I've recently won a LL deal going to Canada, so I am excited that the exchange rate against the CDN$ is now more in our favor... Last June we were in Canada at we were paying about $USD 1.05 to buy a CDN$1.00 and now it is only costing us about USD$.75 to buy one Canadian dollar... another 30% difference in my favor!!!!!

cmdavilacli

[thepiranha]

Thanks for your reply and for answering my question about the Mexican exchange rate. It's amazing that travelers pay 30% more than required. I know that the math is easier at a ten to one ratio, but 30% is a huge penalty to pay for simplicity. I'm pretty frugal and even when the exchange rate was around 10.8 pesos to the dollar, I paid either in pesos that I got from an ATM or with a credit card.

Thanks also for the heads up on the Canadian exchange rate. I didn't realize that the rate is currently so favorable to Americans. I'm heading up to Alaska in July and plan to spend a few days in Vancouver on the way home, so this is good news.

Happy travels!