Aussies rejoice: Attending the 2016 Olympic Games in Rio could be an economical holiday. Photo: David Tease
The Australian dollar may be falling against the most favoured overseas destinations for travellers, but there are places around the world that will not break the budget.
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Michael Judge, manager of corporate clients at OzForex, says even though the Australian dollar is down against the US dollar, the Chinese Yuan, the UK pound and the NZ dollar, there are several countries in which the Australian dollar now goes further.
Go further for exotic travels: The Australian dollar is 14 per cent higher against the Azerbaijani manat.
For example, the Australian dollar is 16 per cent higher against the Brazilian real, 13 per cent higher against the Norwegian krone and 10 per cent higher against the Croatian kuna.
Exchange rates provided by OzForex show that one Australian dollar buys about 2.5 reals compared with about 2.1 reals a year ago.
That is good value for those looking for a beach holiday all-year round. Then there is the Carnival in Rio de Janeiro in February 2016 and the Rio Olympic Games in August next year.
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Judge says with the Brazilian economy not doing that well and with the US economy improving, money is being repatriated from Brazil to the US.
That has helped to depress the value of the real against the US dollar and the currencies of other developed countries like Australia.
For those intending to travel to Brazil, but not until next year, there is probably no need rush to buy reals now. "The bias is towards further depreciation of the real against the Australian dollar," Judge says.
Jesus saves, and you can too: The Australian dollar is 16 per cent higher against the Brazilian real. Photo: Dean Mouhtaropoulos
For those seeking an even more exotic travel destination there is Azerbaijan with its mud volcanoes.
The Australian dollar buys 14 per cent more of its currency, the new manat, than a year ago.
The Azerbaijan central bank devalued its currency by a third recently.
The country by the Caspian Sea is an oil exporter and its economy has been hit hard by falling oil prices. Lowering the currency helps Azerbaijan to better diversify its economy.
The Australian dollar has also appreciated by about 13 per cent against the Norwegian krone.
One Australian dollar is buying about 6.24 krones compared to about 5.4 a year ago.
On the other side of the ledger the Australian dollar has fallen 17 per cent against the US dollar over the past year.
The Australian dollar now buys about 78 US cents compared to a tad over 90 US cents a year ago.
The US dollar has rallied against most currencies for eight months now, Judge says.
The Reserve Bank of Australia next meets on April 7. The bank is expected to cut interest rates, if not on April 7 then at the subsequent meeting in early May.
US interest rates are expected to eventually start rising.
And with commodity prices still trending down, the Australian dollar is expected to fall further against the greenback.
"I think that before the year's end that we could be looking at levels for the Australian dollar of between 72 and 75 US cents," Judge says.
Shane Oliver, chief economist at AMP Capital Investors, expects that Australian dollar could fall to about US 70 cents by the end of this year.
Among the other major currencies, our dollar has risen against the euro by about 6 per cent over the past year and fallen against the UK pound by about 5 per cent over the same period. It is virtually unchanged against the Japanese yen.
"I think it will be sideways or down against the euro and sideways against the yen," Dr Oliver says.
"The UK is in a similar situation to the US with the UK also edging towards an eventual interest rate hike and so the Australian dollar will probably fall against the pound," he says.
For those worried about further Australian dollar weakness against the currencies of the countries they intend to visit, there are travel cards that can be loaded with foreign currencies at current exchange rates.
